Monetization: How is it affecting your business?

Have you examined your cell phone bill recently?  There have been a number of stories on the news recently about overcharging.  Some companies have figured out how to charge add-on fees in the most deceptive ways.  Some of these charges may be illegal, but the practice continues because some company officials believe that the revenue is greater than the consequences.

We have a cautionary tale here.  Organizations sometimes unwittingly get involved with a carefully planned monetization, where they end up spending more than planned.  If the choice is made for the “too good to be true” it probably is.  Sometimes we choose the low cost solution and it really is a bargain.  Other times we miss the hidden costs, in some cases implanted by ruthless business administrators and accountants.

The ability to plan a budget well depends on working with business associates who provide a fair value for services with a give-and-take flow.  The old ideas of the baker’s dozen and lagniappe are actually prevalent among consultants and vendors who go out of their way to make sure the client is satisfied.  This is a two-way street, calling for honesty and fairness on the organization’s part.  Without that, we simply have one party trying to take advantage of the other.

Nevertheless, monetization is a fact in the corporate world, but if organizations understand what is going on they can make better choices.  An example came up at a conference I attended recently.  A speaker described one of the ways the successful software companies define their product lines.  Companies often have the Silver, the Gold, and the Platinum versions of products (or something similar).  The Silver version is the entry level that draws many first time customers, but corporate analysts identify one feature that most users will soon want, and that feature is put into the Gold version (along with many other features).  There is another feature like that in the Platinum designed to quickly up-sell the Gold users.  This practice isn’t much different from going to the store to buy a ball point pen, and having to buy a 10-pack.

The licensing and fee structures for subscription-based software are another area that calls for scrutiny.  Will there be a feature set, or a higher service level needed sooner rather than later, that the organization is not aware of, but which will come with sticker shock?  Frankly, vendors, by and large, don’t see it in their best interests to point out these issues up front.  They are not obligated to do so, as long as their disclosures comply with whatever rules are in effect.

Recently while investigating a cloud product a client was considering, I was surprised at how difficult it was to find the actual price structure.  The entry level prices were featured on the company’s website, but it was very difficult to find the costs the client would be facing given its projected needs.  I eventually found the detailed price schedule in a technical article that was not on the company’s site.

Copyright © 2011-2012 Patrick D. Russell
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