The ERP Lifestyle Consultant

Sage announced in an October 28, 2011 all hands partner conference call that a new pricing method for their products would be forthcoming within the next year and that they’d be ready to think about discussing it within three months.

Three months has passed and it now seems Sage are actively polling about 500 current customers asking what price they’d be willing to pay per month for their current accounting solution.

Update March 2, 2012: Sage have notified that channel of pricing for NEW (not existing) users of Sage 100 ERP, 300 and 500. This poll that was sent to existing users would appear to be testing the pricing method EXISTING users might prefer to pay if there is a transition allowed between module and user pricing (as of now Sage prohibits switching between licensing models).

Pricing options under consideration reportedly are $75, $100 or $125 per user per year. I  believe this is for Sage 100 ERP users though I was not able to view the actual survey so have to rely on the customer’s explanation.

One company sent a copy of the email to us (not a customer of ours) remarking that with their present user count they could potentially face a bill of $40,000 per year. Of course this is only a survey and Sage might implement any number of plans for existing users including grandfathering existing users but adding new purchases at a potentially new rate.

With any change to a subscription model I think the Sage 100 ERP software will be issued expiring unlock registration codes so that using the software without paying maintenance could become a trick of the past for cost savvy customers.

Now is the time to call your support agreements something other than support  and make services other than help desk/ break-fix be the focus of those recurring plans. You are offering recurring agreements to customers, right?

For MAS90 we are largely over the complex upgrade hump so creating an “access agreement” where you:

- provide x on-site planning and strategy meetings – up to y product update installs – up to z version upgrades

This is our “special sauce” that will keep out most competitors who don’t have a local presence.

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For anyone struggling with fixed pricing in their practice — here’s how I resolved the problem of quoting odds-and-end pricing inquiries from customers.

Sure you can sit down and have a value discussion. However that’s often not practical. The customer doesn’t want you to come on site to discuss a Crystal Report or Visual Integrator job that might be perceived as a simple task.

I’m also skeptical about the “Value Bill” advice. I think it’s opportunistic and unethical in some situations. It’s also impossible to streamline in an organization. One person’s value is another persons “two second question”.

Probably could debate this all day and not agree.

In the interest of being able to adopt fixed pricing – what I found works for me is to have what I’ve termed a “pricing menu”.

I went through the most typical “ala carte ” requested services and came up with a “starts at” price.

For most customers the start at pricing — is the price.

For the other 85% who delight in asking a price — and then adding “oh but will it include… ” [insert laundry list here] — “start at” gives me wiggle room.

Also I have had problems that many customers want quick verbal quotes. Going to a full out proposal is often not practical no matter what they teach you in class. I believe my practice thrives because I am able to respond quickly to customers. Waiting three or four days to schedule a meeting for a routine request is for me not practical.

So here’s how I’ve been doing pricing of routine requests. I created a pricing menu and now if a client (or more often someone on the Internet) requests a quick “hey what would it cost” …. I have a standard guideline to review and reply “in most cases our pricing starts at ” … [insert price from list]

I get maybe one or two requests a year to speak to some anonymous web visitor doing research.

It’s almost a certainty that these are some financial types either doing due diligence or writing a research paper that they’ll re-sell.

I’ve never found a way to properly charge for “brain picking”. They all want to pay for an hour or two of services — however in the back of my mind I know that the value goes far beyond the hour or two that they offer – yet they almost always disappear at any suggestion beyond them paying you for an hour of your time (which they usually value at the lowest rate that they’ve offered the guy mowing their lawn someone doing this type of work on the side — aka about $25/hr is deemed “fair”)…

Here’s what the request looks like.

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This morning I received an email from a friend in the consulting business. His question is one that I’ve received before – and one that seems to come up at every conference that I’ve attended in the last two years.

The core of the question is:

Do you make money marketing online?
Is Social Media worth the time investment?
Does it help to sell new sales or mainly attract existing users?

Is the time and effort worth it?

Here’s my answer that I emailed just a few minutes ago.

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Salespeople and free demos are the leading causes of ERP implementation failures. Therefore I employ neither.

Customers have the right to know the positive and negative about software solutions before making investments.

Hourly billing is the root of most ERP problems not caused by salespeople or free demos.

Schulz Consulting Beliefs

Sage is extending their Firm of the Future Symposium sessions with a newly scheduled event happening in August 2011 in San Francisco, CA. I attended one of the first sessions in Atlanta as part of the ITA Conference in Atlanta.

The session that I attended was sold out – with 32 firms announced as a attending. The essential message of the Symposium:

Billing by the hour is counterproductive. The use of ranges of hours (or estimates) when quoting jobs sets up and adversarial (and some would say unethical) relationship where the client is thinking that they’ll pay the lower end of the estimated range and the consultant knows that the bill will be in the higher end — PLUS 10% (or more).

A key takeaway from the Symposium for me has been the use of options. Rather than competitively bidding on projects with smaller budgets we’ve learned to provide options to prospects. These options range from the prospect doing most of the work (least costly) to we do all the work (most costly).

Using options also removes most of the incentive for a prospect to ask for a discount. Instead of a lower price they can be offered a lower value option. It’s the prospects choice.

The concepts in this course are solid, make lots of sense – and for some reason seem difficult for most consulting firms to accept and fully implement. Which is exactly why you should go.

Most consulting firms don’t make the up front effort to fully implement these concepts and instead put their efforts into “why they can’t implement them”.

Here’s more of my experiences from attending the early May 2011 session – as well as a success story that happened immediately upon returning from the Symposium. Read the rest of this entry »

Jay Shepherd is a former practicing attorney and a Verasage Senior Fellow. Here’s a short (6 minute) presentation he did on why hourly billing for lawyers should be extinct before the year 2019 arrives and we all fly our cars around town as predicted in Blade Runner.

Jay Shepherd – Prefixllc

Here’s a great post that I spotted this morning that describes why IT Contracts fail. Though it seems to center around legal aspects – I believe that the true reasons go deeper.

Most IT project failure  leads back to  fully thinking and understand the scope of the project. In the race to get the (free) quote and the (free) assessment from the IT providers the customer forgets to analyze whether they’re making a sound long term decision.

I see this all the time. People (admittedly on a much smaller scale) think they can email a request to dozens of vendors with a request to “give them a price” for a certain project.

In my world it’s usually an upgrade of their MAS90 accounting software. However occasionally it is for a new software implementation. In each instance I’m incredibly nervous that the person making the email request has incorrectly assessed their needs.

As VARS we are left with two choices:

A. Go out and do a free paid analysis (which invariably gets used to solicit bids from a preferred provider)

B. Guess at a number (and hope that if it’s approved that the project doesn’t have any hidden “gotchas”)

The core issue is that customers unwilling to developer a project definition are looking for a Chevy price when in fact they realistically need the current year’s Rolls Royce because they often don’t have the internal understanding of what’s desired/needed and think that the software magically cures the issue.

While this example specifically relates to software I believe it accurately depicts most complex projects where the customer wants a one price bid to fix something they don’t understand.

Sadly the IT world still largely operates under a model where pre-sales consultations are assumed to be completely free and the customer assumes that they’ve correctly identified both current and future technical and business issues (or that they can use a free quote to do so).

When It Comes To Enterprise Software – It’s The Contract Stupid image via

I just received an inquiry from a fellow Sage Business Partner who I’d met last year at Sage Insights (the annual partner conference).  The request he has mirrors one that another partner asked last week.

In the interest of time — and figuring if two people have the same question then probably more do as well — I will share my answer to the following:

Hi Wayne
We are a MAS90 partner in _____. I have met you at Insights in the past but I am sure you meet a million partners.

Have a question about what you use to track your time and invoice your customers? We have used TimeKeeper with ______ for a long time but have some problems and so thought maybe if there is a better option we might consider it. We still have not moved to Ed’s value pricing so rely on tracking time and invoicing it. Any thoughts you have on this topic would be great.

As luck would have it — I do have some quick thoughts. Here’s how we roll… Read the rest of this entry »