Pegasus offers huge discounts but leaves questions unanswered

In a press release that just floated across my desk:

Pegasus Software, a leading supplier of accounting and business software to SMEs in the UK and Ireland, today announced the launch of Scrap IT – an initiative for the UK market which offers businesses a 40% discount on Pegasus Opera II when they trade in their old accounting software.

For a typical, five user, seven module Opera II Enterprise RSP purchase this would save £3,500.  The initiative follows the success of Pegasus’ recent 0% finance deal, which offers interest-free finance over a 24 month period.

Stuart Anderson, Operations Director, Pegasus Software comments: “SMEs are facing some of the toughest market conditions in decades so the right financial software is critical to keep a tight ship.  Our 0% offer has already enabled SMEs to get a grip on finances, achieving a faster return on investment whilst spreading payments and reducing capital expenditure.  But we are confident we can deliver more.”

I’m all for reducing software cost of ownership but there are a few problems with this announcement:

• What will this mean for maintenance charges? Are they being pegged at full retail?
• How does reduced cost equate to faster ROI? The software cost is generally a fraction of the overall total cost of acquisition and of itself has nothing to do with ROI
• Reducing acquisition cost to around £1,000 per user seems more in the ballpark of where this offering should be. Having reduced the price, will it stick or will it expire on 29th August as announced? Given the depth of the recession I would not be surprised to see a ‘We have been so successful that we’re extending the offering’ going forward.
• What will this mean for implementation costs? I am seeing a dramatic fall in consultant rates across the board. But will they fall in line with this scale of price reduction? I doubt it because the economics are different. Even so, consulting units will need to be far leaner and much more attuned to customer needs than in the past.
• What is Pegasus doing about product innovation? This sounds like old software being repriced to reflect its longevity.

Tagged as: Accounting, Pegasus Software, SMB