Pricing and Positioning Agile related Tools and Services in Asia/India
Over the last few months, multiple friends and connection from US have asked me to share my experience with pricing Agile related tools and services in Asia (specifically India.) Following is my perspective:
Disclaimer: Asia is the most diverse and dynamic continent out there. Any reasonable generalization is bound to have loopholes. Take it with a pinch of salt.
Since the topic on hand is pricing & positioning agile related services and tools, let’s focus on senior managers at software companies, who are interested & responsible for procuring (or at least recommending) a service or a tool for use inside their company. These folks mostly belonging to upper-middle class or above. Its important to focus on these folks because we can draw the following behavioral patterns based on their profile:
- 1. They are very value-for-money conscious. .i.e. while they are very price conscious these days they are also getting quite brand conscious. Feature-richness or “fully-loaded” appeals to them because they associate it with value-for-money.
- 2. Premium pricing model works well with them. .i.e. price the product or service artificially high in order to encourage favorable perceptions among buyers. Exploits the tendency in buyers to assume that expensive items enjoy
- an exceptional reputation,
- are more reliable or desirable,
- represent exceptional quality and distinction
- 3. If they can’t bargain the price while buying, they feel they did not get a good deal.
- 4. In my experience, Freemium model generally does not work very well. People will somehow find a way to stay on the free plan. Software Piracy is still a notable problem. Things like sharing a license with others is considered wrong, but people will still go ahead and indulge in it. May be because they don’t fully think through the implications or can’t empathize with IP related regulations.
- 5. Price Discrimination strategy appeals to these folks. .i.e. pricing the product differently for different companies. Bigger discount for larger number of licenses is common. But doing something more like: bigger discounts for startups or discounts for specific verticals like Telecom can attract customers.
Based on my experience consulting and coaching IT companies in India, I would categorize Indian IT companies, who are interested in Agile, into the following 5 categories:
- 1. Large Outsourced Services Organization (InfoSys, Wipro, TCS, CTS, HCL, MindTree, TechM, etc.)
- 2. Large ODC (Off-shore development centers) for giant software product companies (Google, Yahoo, Amazon, Microsoft, Intel, McAfee, EMC, Philips, Dell, GE, Siemens, VMWare, Alcatel Lucent, Ericsson, Aricent, Huawei, etc.)
- 3. Large ODC for large non-software product/services companies (Banks and Financial Institutes [JP Morgan, Citi, RBS, Fidelity], Store Chains [Tesco, Walmart, Target], Transportation [Volvo, John Deere], etc.)
- 4. Mid-size product and services companies (Directi, SlideShare, ClearTrip, Cactus Global, etc.)
- 5. Startups (Eko, Interview Street, CommonFloor, HelpShift, OlaCabs, Olx, Zomato, etc.)
Category 1 is highly obsessed with process adherence & compliance. Typically they have an internal process & tool which all projects have to use. In addition, clients of most projects might have a different process & tool required. Teams end up using both. Most teams use different tools because there are concerns regarding how much transparency is healthy for an outsource client-vendor relation. They want only limited data to be shared with the clients. In fact in my experience, to ensure company-wide consistency and compliance, most companies even have their own home grown tool/solution to deal with this issue. If majority of customers are using a process/tool, its an easy pitch to the companies to use the same approach, provided there is an easy way to share limited info with clients. Using same process/tool could add to the company’s marketing/credibility pitch. These companies are price conscious, but if the value proposition (better customer acquisition) is shown, they have the budgets to buy the tool or service. Might require multiple rounds of negotiation. They are willing to commit higher numbers if bigger discounts can be offered. Fairly long sales process.
Category 2 is fairly process conscious, but certainly to a lesser extent compared to Category 1. For these companies majority of the process and tool decisions are made by their counter-parts from west. They do have a say, but are not going to make the buying decision. However they can sabotage the process/tool decision if it does not work for them. Because of the “distributed & off-shore” nature of work, their needs might be different from the folks making the decision. These guys appreciate higher attention/care to their specific needs. Sales process tends to be much faster than Category 1.
Category 3 is also very process conscious. They are predominantly cost centers. Any tool or process which can show clear cost saving, better accountability & tracking is a big hit. Buying decisions are jointly made, however offshore folks do have a big say. Typically these folks require quite a lot of customization to the service or tool to fit their specific needs. Sales process tends to be very long.
Category 4 is out of the startup mode, and are the “wanna-be-enterprise” scale. These are in my opinion the best companies to chase for process change and tool adoption. They have the right attitude to change. Typically they also have the cash and they generally don’t bargain much. They have a strong desire to scale and standardize. Perfect pitch for a Industry Leading Tool to come in and steal the deal. Again these guys don’t tend to bargain too much, but if you give them a discount it will help make the decision faster because they are still price conscious. These guys will do a very detailed market study & competitor analysis. If possible, they prefer to pick the best in category. Sales process tends to be either couple of days or 6+ months (extremes.)
Category 5 is the least process conscious. However are very efficiency & savings driven. They won’t even talk to you if they feel the product is priced and targeted at Enterprises. They would assume/feel the product is expensive and too heavy-weight for startups. A clear pitch for startups in your offerings is very important. These folks will hunt you down. Again very price conscious, but can be good brand ambassadors. Sales process does take some time.
Hope this helps. Also would be keen to hear your experience.
