I concluded my last piece with a question about SaaS pricing for VSB/SMB. This is something that’s been at the back of my mind for a while but following that piece plus work I’m doing elsewhere, it struck me there are real pricing issues for the SMB user. In the last piece I drew comparisons between Blinksale, Freshbooks and Basecamp. Let me explain the pricing rationale:
- Basecamp Basic: 15 projects, unlimited staff, no time tracking $24/month
- Basecamp Plus: 35 projects, unlimited users with time tracking $49/month
- Freshbooks Limousine: 100 active clients, 2 staff access $27/month
- Blinksale Silver: 50 invoices, unlimited staff access $12/month
Reasonable combinations:
- 1+4 = $36/month
- 1+3 = $51/month
- 2+3 = $76/month
If you decided that 2+3 was the right combination then you’d be paying £40/month for the combined service. That’s not too bad but compares unfavourably with accounting products and services. For instance, the top line price for bog standard Sage Line 50 is around £500 plus maintenance. You could use Winweb for free. If you’re a Twinfield user then expect to pay £20-30/month for those who get Twinfield via their accountant.
You can argue that the accounting products and services are more attuned to the professional market than end users, are more mature with much larger presence than the likes of Basecamp and FB and so can afford to be more competitively priced. That’s a valid argument except that these new services report high registration numbers, increasing at a fair clip. Last July, FB had 65K registered, Today it reports in excess of 125K. So either they’re coining it handsomely or registration is not the same as paid for usage. I suspect that in those cases where people are paying for the service, it will mostly be at the bottom end of the scale.
From a cost perspective, there is no room for price negotiation or discounting because you’re dealing with 2 or more independent vendors. That makes for tough choices unless you see the value of the non-accounting services as worth significantly more than the asking price. Nevertheless, it does mean users will need to do a fair amount of head scratching to figure out the best combination of services.
There is no real integration elsewhere. For US customers, there is QuickBooks 2004/2005 and Simply Accounting import/export to Freshbooks. These are little more than file uploads and downloads so for me, they’re not integrated at all. I’m surprised there is no integration to QuickBooks Online, even though it’s a US only service. Neither Winweb nor Twinfield have integration to FB. Winweb will argue they provide “all you need for small business.” That may be true but does it provide the kind of functionality and (crucially) ease of use that a small business person in service industries needs? Sort of. Like Twinfield, it has yet to establish a US presence so it is understandable.
The logical next step is for Basecamp and FB functionality to be absorbed into an accounting service but in such a way that end users can do what they want with ease while the heavy number crunching that professionals undertake is reflected in the functionality they require. This could come from integration to existing services, the development of fresh capability in FB/Blinksale or the emergence of an entirely new entrant. I have to say I think the last option is unlikely.
Some might ask why I’ve not discussed other services like NetSuite or RightNow. They don’t register on the radar. Salesforce.com has integrations to Intacct and QuickBooks Online and those look to be useful. Provided you need what SFdC delivers and are prepared to pay the starting price of $695 pa for 5 users or $65 per month for individual users. Those figures rise dramatically as you add functionality beyond basic account, activity and contact management. But…if the business consists of more than a handful of people who are concentrating on sales, then SFdC with QBO makes a lot of sense for US businesses. In the UK, Sage isn’t going to bail you out any time soon and I have no line of sight into other service providers which may be looking at this issue.
In a so-called always-on, connected and flat world, I’m amazed this is not receiving any appreciable airtime. Innovation in accounting? I guess it’s all at the baby steps level right now.
Technorati Tags: basecamp, Blinksale, FreshBooks, QuickBooks Onnline Edition, Sage software, salesforce.com, Twinfield, Winweb
