openerp-community team mailing list archive

[Marcelo Bello <marcelo.bello@xxxxxxxxx>]

Fabien, we are discussing the new not the old. So you say a typical
implementation revenue for a project with 40 users is $90,000.

   Now let's do some more basic math:

   - 40 users * 5 apps * 24 months * $15 = $72,000
   - Partner commission on first 24 months (50%): $36,000
   - Importance of commission to partner: $36,000 / $90,000 = *commission
   adds 40% to total project revenue*

   So as you see the commission will not be "4% or less" in the new model
and therefore partners will care about it. In essence, you proved my point
that for clients like me somehow Odoo will become 50% more expensive after
the 2nd year which tells me the model is not well thought through.

*Anyhow, to me it became clear that:*
1. Fabien et al. still have not thought the model in detail yet, hence the
difficulty in getting a concrete answer on the discount policy from now on
(the most important part of my last email was not answered);
2. They forgot to think about the implications of billing the client
directly when they are a foreign company, not very smart in many countries
because of taxes (or they did not forget it but figured it is only an issue
in geographies that are low priority);
3. It is clear that Odoo chose that to grow and achieve its ambitions they
need to impose new pricing and billing and they know this will shy away
some existing clients and partners. Fair enough, its their business and
some growing pains is always expected. Let's watch and see how the
community will adapt;
*4. However, if SA will loosen up the discount policy then partners will be
able to neutralize the no commission after 24 months part of the deal and
it could make it more affordable as well so I think the discount policy is
the key issue now and I am looking forward to seeing how it will play out
in the near future;*
5. In any case, smart partners will realize that they will need to have
their clients sign two contracts, one for OPW and one for their own work.

     Last but not least, most arguments I hear from SA only make sense if
one believes that a plain vanilla Odoo install can satisfy the needs of a
client. For instance, the "free for two users" story is a fallacy if you
take into account that even a small company in most countries would need
some kind of local help to get a usable system.
     Maybe in the small subset of countries Odoo is prioritizing the
"vanilla" SAAS offer is a reality. Now to everyone else that need strong
localization efforts...

Best regards,

Marcelo


On Mon, May 19, 2014 at 4:53 AM, Fabien Pinckaers <fp@xxxxxxxxxxx> wrote:

>
> > 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
>
> No, this is a common usecase:
>
> Here is a typical use case (with old pricing), 40 users:
>   - Public Price: $18720
>   - Partner Price: $9360 (a ready partner)
>   - Price sold to customer: $13.000
>   - Implementation Cost:    $90.000
>
> Maintenance part of the TCO: 12.6%
> Commission  part of the TCO:  3.5%
>
>
>
> >
> > On Sun, May 18, 2014 at 11:47 AM, Fabien Pinckaers <fp@xxxxxxxxxxx
> > <mailto: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 <tel:%2B32.81.81.37.00>
> >     Web: https://www.odoo.com
> >     Twitter: @fpopenerp
> >
> >     _______________________________________________
> >     Mailing list: https://launchpad.net/~openerp-community
> >     Post to     : openerp-community@xxxxxxxxxxxxxxxxxxx
> >     <mailto:openerp-community@xxxxxxxxxxxxxxxxxxx>
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> >
> >
>
>
> --
> Fabien Pinckaers
> Odoo Founder
>
> Phone: +32.81.81.37.00
> Web: https://www.odoo.com
> Twitter: @fpopenerp
>