Pricing a BPMS: It is Still the Wild West

  • May 12, 2011
  • Scott

Sandy Kemsley’s blog on BPMS pricing, she points out that pricing is still incredibly opaque.  There’s also a discussion on Quora that she refers to.

The problems:

  1. Different vendors use different metrics to price (user, process, CPU, PVU, duration, etc. )
  2. Different vendors are pricing different things (simulation, Modeling, BPMN, BPEL, XPDL, execution, integration, reporting, analytics, ESB, Messaging, Database, etc.)
  3. The customers are really in different situations.  If a vendor prices only by user, a customer with a simple process but 100,000 users can’t buy that product.  They might buy a product that prices by CPU (especially if their process has very little processing overhead).  So by publishing prices, vendors run the risk of turning away business as well as the risk of selling too cheaply.  (The CPU-priced vendor might have been able to charge a higher price, but if they published a per-CPU price then the customer will take the lower price, of course).

The root of it is that the vendors are trying to make a value sale (or value-minus).  And customers are just trying to get a price that makes their ROI (value equation) work out.  In that kind of market, transparency isn’t likely.

From Sandy’s blog:

Remember the bad old days of buying a car, when you had no idea how much it cost when you walked into the showroom, and had to go through some weird pseudo-negotiation between the salesperson and his manager, where they would throw in the free floor mats if you did your financing with them, give you an extra discount if it was within a week of the end of their sales quarter, or bait-and-switch you into a more expensive model? Enterprise software has always felt a bit like that to me, and BPMS pricing and sales tactics sadly fall into that same category, at least for many of the major vendors.

“the bad old days”?  Car buying is still like this in the US (you do have alternatives, but by and large, it boils down to this same kind of experience).

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  • Scott, I realized after posting my comment on Sandy’s blog that you’ve already posted here. You make precisely the same points, well laid out here though. Not surprised, and Like it, obviously! 🙂

  • Scott, at least now there are sites where you can find the dealer price for a car before you head to the showroom — at least gives you an idea of what to expect. The same is not true for most enterprise software, including BPMS. BPMS cloud vendors are particularly bad for not publishing pricing that should be standardized.

    My solution for the car pricing experience: I don’t own one, and I use Zipcar when I need one. 🙂

    • True, re: car pricing.  But those sites are not very helpful if you’re not buying a highly commoditized vehicle, past its “freshness” date.

      Admittedly, there isn’t even an MSRP for BPM software.  There is a list price, it just isn’t published.  I can say with certainty that at least two of the vendors have a very formulaic approach to determining the top-end number.  But then they work down from that with various discounting schemes depending on the situation.  One could infer that the formula always produces a number that is too high… And of course they don’t publish the formula.