September 5, 2007
So I will be presenting at our annual seminar at SMASH in a few weeks, and I always enjoy doing so. One thing I have picked up on over the years when presenting in our seminars, in addition to other seminars, is that look of curiosity and waiting that appears on the audience’s faces as we go from slide to slide. That look that can be translated to, “How much does this stuff cost?”
I am going to talk a little about a fairly touchy subject. Pricing.
It’s no secret that ACD/Labs does not share it’s pricing online while some of the other vendors of NMR software do. Sometimes we take criticism for that. I have also heard many times from many people that ACD/Labs software is really expensive.
I am not going to hide those conversations, they are out in the open right here and right now. But the real question is, “what defines expensive?”
I think it is very subjective. I happen to think that $400 for a purse is very expensive. My wife may disagree. I think that $5000 for a guitar is not expensive. My wife definitely disagrees. It’s subjective.
But we are talking about NMR software after all. I think when you think about pricing for software you have to look at many different variables.
So there are a couple of questions I will try to answer to somewhat address the “elephant in the room”:
1) Is our software expensive?
Some people have a pre-conceived idea that no matter how good a piece of software is, it shouldn’t cost more than $500. Heck, some will argue that all software should be free. I disagree with this for a number of reasons, but let me start by outlining some of the things that have to be considered when determining the price of software. To name a few:
– The cost of developing the software
– The cost of maintaining the software. If you sell it for less than the cost of development and improvement, than it becomes very difficult to maintain the software, add new products and features, and fix bugs. If the software company goes out of business because they can’t maintain and improve their software, everybody loses.
– The cost of supporting the software and the customer base. i.e. product management, development, technical support, sales, marketing, production, etc.
– The market. How big is it? Is there competition? Are they better than you? What can they afford?
– The costs the consumer encounters for deploying the software in their institution (i.e. installations, training, etc.)
This kind of thing is of course not unique to ACD/Labs. It is the similar to what other industries have to consider when selling books, education, or pharmaceutical drugs!
So answer the question Ryan, “is your software too expensive?” Well I would say no. But of course I would, I am an employee of ACD/Labs after all, I can’t admit that it is expensive, can I? The truth is that I have spent a lot of time in my last 4 years speaking with customers and users of our software. I have heard excellent stories about how valuable our software is, how much time it has saved, and how much it has benefited their research, students, departments, etc. One of my favorite comments from a Structure Elucidator user was, “If the software can either dereplicate or elucidate even one of my unknowns, it has paid for itself!” In instances like these, I don’t think the software is too expensive because the benefits these groups are receiving have far outweighed the cost it took for them to obtain the software.
Unfortunately, there are also cases where users just haven’t found the software useful for their research, or haven’t even gotten around to installing it yet. In those cases they might have considered the software not valuable and thus the upfront cost was not justified. It happens. We try to prevent it as much as possible, but unfortunately it is unavoidable in some cases.
I think we have very good software. We work very hard on the development of good software products. We fix bugs and add new things year round and we release a MAJOR version of the software every year with new enhancements and features. With the help of NMR spectroscopists and scientists around the world, we will often identify market needs that allow us to further innovate and augment our core software through new software product offerings. We have been in existence for over 11 years and we continue to make good software and we continue to improve and innovate from version to version. We work hard to make our different modules integrate with each other so users can extend the capabilities of the software. Finally, we sell the software. We have many, many customers from all over the world.
We’ve sold to these companies and institutions and we have survived more than 11 years in this industry selling and supporting our software in many of the above institutions and more. I don’t think we would have come this far if our software was flat out “too expensive”.
Finally, I think I have to acknowledge the market that we are in strictly from an NMR software perspective. There are several companies who primarily develop NMR software out there: Acorn NUTS, Mestrelab, Modgraph, NMRTec, to just name a few. But I don’t think any of these companies cover the scope of the NMR Spectroscopy applications like we do. This is not a criticism of them, they just have a different business and strategic focus for what they want to achieve with their software. We offer NMR processing, prediction, databasing, automated structure verification, computer assisted structure elucidation, high-throughput quantitation and verification, and enterprise solutions. Furthermore, we support a wide range of other analytical techniques so it is possible (with the correct modules in place) to view, process, and database NMR, MS, Chromatographic, UV-IR, (and more) data all in one place. In other words whether you are just starting with our simple NMR Processor, there is the opportunity to expand the solution in many different ways. I don’t think this is possible with many other NMR software companies. Of course some people aren’t interested in the complete solution. That’s completely understandable and as a result you can just purchase what you need. For that I think our individual NMR processing, prediction, databasing (and other) packages are very competitively priced with other similar products in the market. Check out the quotes from some of these press releases, there is a common theme in all of them:
“All of our chemists are now able to manipulate their NMR data at their convenience which has eliminated the lengthy line-ups we used to face in our walk-up lab. ACD/Labs was able to provide us with great tools that meet our needs and were competitively priced.“
“ACD/Labs were also able to offer us a competitively priced and flexible site license that meets the range of access requirements of both the students and staff members at Bristol.”
“All of our chemists are now able to manipulate their NMR data at their convenience which has eliminated the lengthy line-ups we used to face in our walk-up lab. ACD/Labs was able to provide us with great tools that meet our needs and were competitively priced.”
It of course becomes a bit more difficult to price some of the bigger products because there is simply nothing comparable to it in the market. And generally these bigger products are subject to huge amounts of development time (i.e. ACD/Structure Elucidator and ACD/2D NMR Expert).
Is ACD/Labs software expensive?
No. Some of it is, yes…but I think it is expensive for a reason. And that of course is subjective, if you receive the benefits that we claim from the software, then it is definitely not expensive, in my opinion.
The point I am trying to get at is that the value of the software is what you yourself get out of it. If you have a major problem with a crowded instrument room because all you have is one seat of the vendor’s processing software available, then deploying offline processing for all of your chemists would probably have a significant amount of value to it. Then again, if you don’t have this problem but you view it as a luxury to have desktop processing for everyone, then perhaps you would think it is too expensive.
2) How much is our software?
Our company has a policy regarding not publishing our prices and it is not in my right to publish those here. That policy has been implemented for many reasons, and it does raise an interesting question.
Why wouldn’t we share our prices publicly?
Well I think that the logical response most people would come to is, “because they are too expensive”
I don’t believe that’s the case.
In fact, years ago, we DID publish our pricing on the website, we even had a webstore for all of our products. Unfortunately, this was not successful. In fact, we continued to sell software the way we do now, through people contacting our account managers and having a discussion about their wants, needs, and desires.
And this, leads to one of the problems we encountered by posting our pricing online. It’s one of the drawbacks of having 100+ different products. Potential customers tend to get overwhelmed by the number of choices and they want to make sure that they don’t pull the trigger on a product that they don’t need. So they simply write an email or pick up the phone. Furthermore, the pricing of our products is not always static. There are often special discounts on certain products, and bundles depending on whether you are a new customer, current customer, an academic, the number of products or licenses you want to buy (do you want a copy for everyone, or would you like 15 people to share 5 copies), etc.
Therefore, as a company, we have resigned ourselves to the fact that we need to involve the sales person in all sales discussions. In doing so we can ensure that they can take the prospective customer through different options and ensure they get set up with the best solution for their needs at the best possible prices. I think that’s a good thing. We pride ourselves on good customer interactions and customer service, and I hope that some of you have benefited from that already.
If you have made it to the end of this entry, I am grateful for your attention. I hope that I have at least somewhat addressed the elephant in the room, lab, or blogosphere.