Several people wanted a vendor who prices their software product in a tiered
manner to defend their pricing scheme. I'm actually pleased to do so.
We price QueryCalc on a tiered scheme. The reasons are: (i) we think it's the
fairest possible way to price the product. And (ii), we very much want to
attract the small, first-time customer to QueryCalc and to the HP3000.
In one sense, QueryCalc isn't truly tier-priced. It only has one price:
$12,500. We simply offer deep discounts to the smaller machine users. But, if
we are successful at making their machine usage successful and productive,
the small customers tend to increase the intensity of their machine's usage,
and thus ultimately their machine size. As they do, they move forwards
towards paying the full price for QueryCalc. However, tiered pricing allows
them to move at their own speeds, upgrading only when necessary, in a
pay-as-you-go process.
An increased utilization and increased value due to QC has happened many
times. One of our fastest upgrading customers bought QC when they were on a
micro. Their usage was successful enough that they moved to a 935 within 18
months. Then they moved a year later to a 949. Then, two years later, they
bought a 967-987 pair of machines. At the end of that period, they said they
would have gladly paid 3 or 4 times what they ultimately did for QueryCalc,
if they had known how valuable it was (and if we had had the foresight to
charge them that amount).
What I never remind this customer of -- because they've come to be good
friends -- is how much indecision went into their initial purchase (at a time
when QC on a micro was only priced at $1990). The system manager said that
$1990 was as much as he felt he could gamble on a computer system they'd
never heard of before. But in the end, once they'd upgraded to full price
copies and their new "big" machines, they paid their final invoice of $15,000
or so, on a verbal quote, before we had a chance to bill them.
As our customers upgrade, they only pay the difference between whatever
equity they currently have in QueryCalc and the price of the machine that
they are moving to. Once customers have reached a 957/939 class machine, they
will have paid full price for QueryCalc. Any further upgrades after that are
without charge.
A few current prices of QC are: a micro is $3400, a 917 is $3990, a 927 is
$5,500, and a 928/937 is $8,500.
Nonetheless, even without this level of deep discounting, it is the small
user who still bears the brunt of the burden as a percentage cost of his
machine. On a 917, QC is often 33% the price of that you would now pay for a
complete system, yet on a 996, QueryCalc's cost is is less than 1% of the
entire system's cost. But on each size machine, if done properly, QC can
become the most important element in providing a significant return on
investment for the system as a whole.
Indeed, I've gotten to the point of saying that if QC hasn't caused you
within two years to reorganize your business in such a manner that the
savings generated aren't approaching (or greater than) all prior investment
in your system (hardware, software, personnel), then QC's usage has not lived
up to expectations.
That's why we especially cater our sales effort to the BUSINESS people in the
organization -- not because we're trying to skirt DP, but because if we can
get the people who deeply understand their businesses, and who have the power
to make changes in the way that they do business, to use QueryCalc
imaginatively, then the HP3000 can rapidly become the single most valuable
resource in the entire organization. The HP3000 is simple enough to be
understood. And it's reliable enough to be trusted. What we want to do now is
make it plastic -- and productive -- and fun.
I've enclosed below a e-mail I received a few days ago from one of our
customers who happened to stumble onto our yet-to-be-completed web page. The
person who wrote the note is his company's general manager. His comments tend
to be very typical of what we hear once or twice almost every week (although
they may be unsettling to many on this list).
=================================
Just wanted to take a second a let you know that I found your web site. I
have often wondered if EVERYONE felt as strongly about QueryCalc as I do.
QC has allowed me to go from having 3 people dedicated to MIS to 1 person
working 1/2 a day. The postscript fax ability has reduced my overhead for
report distribution to almost nothing. We are very thankful to have found
you 5 years ago. Anyone that owns a 3000 and does not own your software is
throwing money out the window. The support you have provided (both QC and
HP related) has been 2nd to none. I wish you continued success and a
prosperous new year!
=====================================
Everything we do in QC is designed to be as simple, as plastic, as reliable
-- and most especially, as automatable as we possibly can make it. Once a
task has been finished and a report is producing valuable information, and
the report's contents have been verified six ways from Sunday, it can be
converted into batch in just one sentence.
Once the customer has 100 or 200 such reports running in regularly scheduled
batch, perhaps once an hour, once a night, once a month, or once a quarter,
the people who receive these reports are inevitably going to know their
company's business very well.
In this usage model, the customer doesn't necessarily need large machines,
nor does he need a lot of people tending the machinery. The customer who
wrote the note above runs his business on a 927 (and it's a relatively large
business, with several to many datasets with multi-million entries).
Databases that are well designed and well indexed do not require extremely
large machines, just a lot of disc space, if the retrieval and data entry
processes are efficiently implemented.
Ultimately, all technology becomes simple and reliable. It happened with
color televisions. It happened with xerox machines. It will happen with
computers. Of all the commercial data processing/database engines currently
out there, the HP3000 is most like the computer of the future. Having a great
number of mechanics hovering over a piece of machinery is never a virtue.
Rather, it has almost always been an overt symptom of a system design failure
-- or at best, an immature design.
The HP3000 allows extraordinary levels of success and productivity to be
achieved. Surprisingly, I consider tiered pricing to be a very important
component of the customer's ultimate success -- simply because when initial
purchasing decisions are made, in the absence of any other knowledge -- price
is generally the primary determinant of what path is to be taken and what is
to be purchased.
In furtherance of my advocacy of tiered-pricing, I strongly believe that it
would be in HP's best interest to offer reasonably powerful systems at or
below the $10,000 price point. I also strongly believe that it is in HP's
best interest to offer developers systems at the lowest prices possible, to
encourage the design and development of IMAGE-based database systems. Tiered
pricing for QC is a principal constituent component of our attempt to do
everything we possibly can to get business people to choose the truly
appropriate path, the one that will truly work best to their long-term
interests and profitabilities. This is not simple marketing nonsense with me.
I deeply believe this to be true.
Wirt Atmar
AICS Research, Inc.
University Park, NM
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