The big news this month is that Microsoft is going introduce substantially higher prices for the most advanced level of Microsoft CRM Online. The increase is more than 50% for the high end offering but there is also going to be a lower priced offering at just $15/user/month. Only time will tell whether the new pricing options are a good move for Microsoft or not. The one thing we can be sure of is that this pricing change highlights the need for long-term contracts.
In a long-term contract both parties agree what the price is when the contract is signed and also what the price will be upon renewal. This significantly lowers the risk for the purchaser. Imagine you are a CRM Online customer with 100 seats. Your monthly bill might go from $4400/month to $6500/month. That represents an increase over budget of $25,000 per year. This could be a significant expense for many companies.
At WatServ a primary concern for us is reducing our customer’s risk. We do this on the technical side as well as on the business side. From time to time we get requests for short-term contracts, even some month to month. While we try and be flexible in order to meet our customers’ needs we discourage short-term contracts because month to month agreements (no contract) and short term contracts benefit the hosting company, not the customer. Long term contacts benefit the customer by guaranteeing pricing over the contract period. To further compliment this business objective, our all-inclusive prices means that our customers never receive a bill for services that surprises them. Unlike most of our competitors, WatServ has no monthly incremental charges for power, extra internet bandwidth, service fees, overtime charges or a dozen other click charges that could add 20-50% or more to the customer’s monthly bill.
While it might sound attractive to be able to get out of a relationship at a moment’s notice that flexibility also means your supplier can increase their prices at a moment’s notice. If you are going to use your ERP system for at least seven years why would you want to risk paying more when your contract renews?