openerp-community team mailing list archive

[Dominique Chabord <dominique.chabord@xxxxxxxxxx>]

Eva,

I can understand that low pricing of Odoo might damage your SAP
business. Nevertheless you must understand that early adopters of
TinyERP/OpenERP and historical partners had good reasons to go with
OpenERP and not with SAP and will have real difficulties to adapt to
new rules.
>From my standpoint, problems for historical partners mean, soon or
late, problems for the editor.

2014-05-19 10:34 GMT+02:00 Eva Pinter <epinter@xxxxxxxxx>:
> Hello Vadim,
>
> Please allow me to make a "bad" comparison.
> If what you say was right, then all SAP consultants would be unemployed at
> the moment. And what I see in the market is the contrary. The demand for SAP
> consultant is growing again. With an average project duration of 6-9 months
> and a project team of at least 3 consultants, the price of an SAP project
> for a 20 users project will come way higher than the 20k. SAP has  253,500
> customers well willing to pay the price to use their system, to make the
> upgrade themselves, to correct the bugs themselves at a non negligible cost.
>
> IMHO, OpenERP is good enough to compete with the best players in the market
> and the best at the moment is still SAP.
>
> So being a fraction of the costs for implementation and for maintenance, I
> guess the market for companies willing to pay the reasonable low price of
> OpenERP is big enough. But of course, it's a personal decision on which
> market one wants to position itself.
>
> Regards
> Eva p.
>
>
> On 19 May 2014, at 08:53, Enapps :: Vadim Chobanu <vadim@xxxxxxxxxxxx>
> wrote:
>
> Hi Eva, its not a question of what can a company afford. Its a question of
> supply and demand.
> There are quite a lot of other competing erp solutions on the market that
> will bid for 20k to implement a system for 20 users. And by 20 users i mean
> that will be 20 employees.
> Cheers,
>
> Vadim
>
> Sent from my Windows Phone
> ________________________________
> From: Eva Pinter
> Sent: ‎19/‎05/‎2014 08:39
> To: Enapps :: Vadim Chobanu
> Cc: Marcelo Bello; Fabien Pinckaers; openerp-community@lists.launchpa
> Subject: Re: [Openerp-community] How will price per user really work?
>
> Hello Vadim,
>
> I really do not understand how a company that has 20 ERP users, that means,
> they have probably more than 20 people working in the company cannot afford
> 60€ per user per month for their ERP. If I calculate the minimum wage for
> the UK, that is around 1200€ per month, I think a company of that size can
> add 60€ to the monthly costs of a part of their employees to have a powerful
> system that will save them a huge amount of time. 24'000€ for wages and
> 1200€ for their core system, or a fee of 5% on the top of the salary.
>
> It is not unusual for an ERP system for a company of that size to cost 1/2
> Mio € to implement, in fact for other ERPs, the implementation costs are
> rarely below 50'000€ and this is for the very minimum without any change in
> any screen and no custom development.
>
> So, maybe the question is wether the project is an IT project only or wether
> this is a full ERP project, that would include streamlining of the business
> processes, change management, documentation and training.
> To support the customer in setting up the best practices in terms of
> business processes should be the focus of every ERP project.
>
> Having implemented other ERPs, and knowing the costs of training and
> maintenance (not only from the editor, but also from the consultants) as
> well as the costs of any small change in the ERP, I can assure you that the
> proposal of 60€ to have the system constantly corrected, maintained and
> backuped is a low price to pay.
>
> And frankly, is it the objective of an integrator to undersell his
> knowledge?
>
> Best regards
> Eva P.
>
> On 19 May 2014, at 06:46, Enapps :: Vadim Chobanu <vadim@xxxxxxxxxxxx>
> wrote:
>
> Precisely, thank you Marcello!
>
> I would struggle here in the UK to charge more than 20k GBP for a 20 users
> ERP implementation. And then if they are to pay 20*12EUR*5 apps*12months =
> 14.400 per year! Not far from the initial implementation costs. But wait -
> on top of that the service provider must also make a living - add another 6k
> a year and there you go: an ERP system that costs every year to maintain as
> to implement! If someone can sell that, please send CV to jobs@enapps - we
> definitely want you and perhaps will need funding to expand into new
> markets.
> Out of sync with the reality for sure and i would definitely love to see
> that business plan too.
>
> Sent from my Windows Phone
> ________________________________
> From: Marcelo Bello
> Sent: ‎19/‎05/‎2014 02:25
> To: Fabien Pinckaers
> Cc: openerp-community@lists.launchpa
> Subject: Re: [Openerp-community] How will price per user really work?
>
> Fabien, let's please be intellectually honest here. Your argument:
>
> "The part of the commission on Odoo Enterprise is usually lower than 4%
> of the revenue a partner take on a project. So, their motivation is not
> on the commission."
>
> Basic math for a client with 20 users and 5 apps for 24 months:
>
> 20 users x 5 apps x 24 months x $15 = $36,000
>
> Partner commission for 24 months (~50%)= $18,000
>
>
>     If you are right and commission is less than 4% of total partner revenue
> for such project than you are saying that total partner revenue from project
> for first 24 months = $18,000/0.04 = $450,000+
>
>     With assumptions like that your investors must be soooo excited. Would
> be fun to see your business plan.
>
>     Now back to reality, I bet no one here will agree with you that average
> partner revenue for the first 24 months of a project for a client with 20
> users and 5 apps is close to HALF A MILLION DOLLARS! A quarter of that is
> also unrealistic, and you know it.
>
>     So I still think that monthly cost of Odoo after the 24 month period
> will increase by 50% because partners DO CARE about their commission, unless
> they can game the system which is my next point.
>
> =================================
>
> You really must clarify the discount policy, in the video I watched it was
> said that now Odoo invoices DIRECTLY to clients/users and partners get their
> commission by invoicing to Odoo. That made me think that you would now
> ensure everyone charges the $15/app/user you want to charge and effectively
> blocking partners passing their discount on to clients (especially because
> you want the full price after the 24 month period so why let partners give
> discounts?).
>
> But then you just answered:
>> If I apply the discount 50/60% to my customer because I do not care
>> about commision and I want to sell an OPW.
>> What happen after the two year? The customer have to paid 12€/per
>> apps/per user? Or you still make him a discount?
> Fabien: We keep the initial price negociated with the customer.
>
> So any partner with half a brain (and an expectation to maintain the client
> for more the 24 months) will realize that they should from now on get the
> most discount they can get on OPW and pass that on to the client. And then
> have a second contract with the client for what it wants to charge to cover
> the monthly support the partner provides to the client. This way the
> partners will effectively neutralize your idea of cutting commissions after
> 24 months.
>
> I am sure you thought about that but somehow did not care to explain how you
> will really deal with discounts.
>
> Best regards,
>
> Marcelo
>
>
>
> On Sun, May 18, 2014 at 11:47 AM, Fabien Pinckaers <fp@xxxxxxxxxxx> wrote:
>>
>> Hi,
>>
>> I just wrote a blog to explain the new pricing:
>>     https://www.odoo.com/blog/1/post/158
>>
>> Please read it before going further in this email.
>>
>>
>> I'll try to answer most questions here:
>>
>> 1/ How to compute the price?
>>
>> The price is: # total of users X # of apps bundle X 12€
>>
>> 2/ Why don't we charge according to real usage? (e.g.: 5 users on CRM, 3
>> on accounting, 7 on projects?)
>>
>> Because it's impossible to predict for yearly contracts! Quoting would
>> become a nightmare and a lot of people would abuse from this unclear
>> situation. (a customer would start with a low price but three month
>> after we would have to upsell him because of the number of users on some
>> apps)
>>
>> Lets take the following use case: a company of 10 users that uses CRM,
>> accounting, projects. They have 3 sales person, 4 consultants, 1
>> director, 1 secretary and 1 accountant.
>>
>> When you do a quote for this customer, how many users do they have per
>> application?
>>   - is the director using accounting and CRM?
>>   - can the sales have read access to project for follow-ups to their
>>     customers?
>>   - can the accounting check sales orders coming from the sales?
>>   - is it the secreatary that give access rights to others users?
>>
>> I checked in our production database. We have 7 persons working in the
>> marketing department. If one do a quote of 7 users for the marketing
>> application bundle, it's totally under-estimated.
>>
>> In reality, we have 45 users on marketing application, not 7:
>>   - the Professional Service team that built the certification sample
>>     exam on the website (survey)
>>   - users that train others users on features
>>   - managers that need statistics about events, mass mailing, ...
>>   - most sales need an access to check prospects on events,
>>   - system administrator need an access to allocate access rights and
>>     test for others users
>>
>> 3/ Is it expensive?
>>
>> Absolutly not. It's 2x to 3x cheaper than the market average. Check this
>> comparison of software vendors:
>>   https://www.odoo.com/website/image/ir.attachment/537400/datas
>>
>> Moreover, partners get 50% to 60% discount on the public price. It means
>> gold partners pay only 4.8€ / $6 per user and per application. Whatever
>> the market, it's super cheap and super competitive.
>>
>>
>> 4/ Is it an increase of the price?
>>
>> For some customers: no. (1-3 apps)
>> For some customers: yes.
>>
>> The biggest increase would be around 2x more for one particular customer
>> that uses a lot of applications. (6) I never saw a company running 10
>> apps and if they do, it's normal that they pay 120€ per user because the
>> value they get from Odoo is huge. No other product can offer this.
>>
>>
>> 5/ localization & customization
>>
>> Odoo has a lot of huge advantages compared to traditional ERPs:
>>   - higher scope: website, ecommerce, cubes analysis, CRM, ...
>>   - better usability, faster implementation
>>   - better flexibility: allows custom development and high level config
>>
>> Odoo also has a few disadvantages compared to traditional ERPs, the main
>> one is the localization in some countries. (something we will fix for v9
>> as we will massively invest in accounting l18n)
>>
>> Odoo has a lot of PROS and a few CONs. But the few CONs are largely
>> compensated by the PROs. As the product is better, economics tell us
>> that the product must be more expensive.
>>
>> Not only we are not more expensive, but we are at least 2x to 3x
>> cheaper. And, if you take the partner price 4.8€ per user and per app,
>> we are 6x cheaper than the competition!
>>
>> I do not know a lot of industry where a product can be 2X cheaper for a
>> better quality.
>>
>> One should not be frustrated about the price.
>>
>> @marcelo
>> > I recently read the posts by the Compiere founder explaining what
>> > went wrong after he got VC money. Read it and it will look like it is
>> > all happening again.
>> Every time we do a change in the community people cry: take care of
>> forks, read Jorge's blog, VCs are evil, OpenERP does not understand its
>> users...
>>
>> Odoo is not comparable to Compiere/Tryton/Openbravo or others. The
>> sustainability of a product is not related at all with fork threats,
>> failure of others open source software or what ever.
>>
>> The sustainability of every product is directly linked to it's ability
>> to create a sustainable model where partners and publishers get enough
>> revenues to grow their activities on the product.
>>
>> This requires a lot of things like: having a great product allowing good
>> service margins, a good price for the publisher, happy customers, etc.
>>
>> >      What kind of business puts potential clients in front of active
>> > paying clients? The model is wrong wrong wrong.
>>
>> What's wrong is to have a pricing so cheap that it does not allow to
>> sustain the development of the product, or too few customers because the
>> product is not competitive. That's what killed some products.
>>
>> >       If Odoo was a ready-to-use software then the model would make a
>> > lot of sense. But they are ignoring the importance of localization &
>> > customization. If I wanted off the shelf software I wouldn't bother
>> > going open source.
>>
>> Our customers don't choose Odoo beause it's open source. They choose
>> Odoo because it's better (products and/or servives of partners)
>>
>> We should stop being frustrated of being open source. It's not because
>> we are open source that we should be cheaper. The only thing that
>> matters for a customer is to have a great product at an affordable price.
>>
>> Open Source is not a customer value, it's a way to develop better
>> products.
>>
>>
>> >             Also, this thing that partners will not get any commission
>> >         on contracts with more than two years is REALLY nonsense. It
>> >         essentially means that the contract will become 50% more
>> >         expensive on the 3rd year because the partner will need that
>> >         revenue back and of course it will be important for the client
>> >         to keep bonds with the partner. It is really sad when companies
>> >         pull this sort of crap on their "partners".
>>
>> My understanding is that partners don't sell Odoo Enterprise because of
>> their commissions. They sell it because they need it for their customers
>> and because this allows them to sell more services. (and this is how it
>> should be)
>>
>> The part of the commission on Odoo Enterprise is usually lower than 4%
>> of the revenue a partner take on a project. So, their motivation is not
>> on the commission.
>>
>> I may be wrong. I am open to discuss this during the community days.
>>
>>
>>
>> Hope it helps better understanding this strategic move,
>> Thanks for the feedback,
>>
>> --
>> Fabien Pinckaers
>> Odoo Founder
>>
>> Phone: +32.81.81.37.00
>> Web: https://www.odoo.com
>> Twitter: @fpopenerp
>>
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