SugarCRM: Principle #1 in Bad Economy - Give More Value at Lower Price
Yesterday SugarCRM announced new pricing for it’s flagship products SugarCRM Professional and Enterprise, as well as simplified pricing and a brand new entry level product SugarCRM Express.   By eliminating price differences for on-demand and on-premise versions, while lowering the price to $360/user/year for PRO and $600/user/year for Enterprise, Sugar also signaled it’s strong desire to be the leading “Open Cloud” application provider.  The lower prices gives SugarCRM customers more value at a lower cost - just when they need it most - in the middle of the worst economy in 80 years.
The CRM Guru, Paul Greenberg agrees - check out his ZDNet blog from yesterday.
The changes also make great sense for SugarCRM as well as the general partner community for two reasons.
First is the release of Sugar Express, which allows Sugar, for the first time, to obtain a revenue stream for those who only need the functionality of the open source (Sugar CE) version, are not ready to pursue the higher Professional versions, but still want a reliable support program. They are basically taking on the non-sanctioned companies out there who aren’t in the partner program, who are hosting/selling CE hosting services and generating revenue without contributing to the community. This is a good thing to protect the brand - to many customers who think Sugar is a bad product because they choose a ‘fly by night’, non-sanctioned company who was hosting CE and not doing it very well.
Second, by standardizing on one price for each version (instead of a lower price for on-premise vs. on-demand) Sugar will actually increase it’s total revenue dramatically and get better leverage from their open cloud environment. It’s no secret that the majority of Sugar implementations are on-premise. By standardizing the pricing, giving all customers an on-demand environment (while still allowing them to go on-premise if they like which is a KEY DIFFERENCE from other SaaS vendors) they will a) generate more net revenue by capturing more hosting service revenue b) ensure a better experience for customers and c) get better cost leverage out of their hosting environment.
Sugar is also working hard to enable the partners to more effectively implement and configure the Pro and Enterprise applications in their cloud environment with the Cloud Console (rebranded version of Data Center Edition).
Some partners with hosting services will complain that Sugar is taking hosting revenue away.  That may be true if all the parter was doing was loading Sugar on a box.  But there is clear room for value added hosting services in Private Clouds, especially where the customer wants to retain complete control at the root and database level or even better, host mutliple open source applications, connected together, in the cloud.  Levementum uses private clouds on Amazon EC2 to allow customers to manage BOTH Compiere and SugarCRM applications that are integrated as one solution.
Sugar is still on the track as the first Open Source business application to go IPO.  It’s fun to be along for the ride.
