There is a discussion going on in the blogosphere about the impending entry of Microsoft to the on-demand CRM market, with price points in the $50 per month/user range – see for example here or here or here. The discussion is about how this is going to seriously undercut Salesforce.com. Well, I am all for undercutting, but $50/month/user doesn’t, well, cut it for me! The enterprise software market could use a little old-fashioned price competition. Even after the last downturn, the industry remains bloated and inefficient. This is most starkly illustrated by the typical enterprise software business model where five even ten dollars are spent on sales & marketing for every dollar spent on R&D – here is the income statement of Salesforce.com if you need proof. If you are the lucky customer of such companies, reflect on the fact that most of what you are paying for is simply paid to market the software to you.
Zoho CRM takes a very different tack. First 3 users are free (that is our marketing expense, if you will), and from that point it is $12 per month per user. Come on, I hear you say, how can a product that costs 70-80% below the competition be just as good? Actually we say our product is better, but don’t take my word for it. Try it out yourself – sign up for a free account at http://zohocrm.com
There is no big secret to our low prices – we keep our costs under control (like any sane business would) and pass on the savings to the customer. That magic formula has worked wonders in every other industry, so why not try it in software? The on-demand software revolution is meaningless if it doesn’t actually lead to materially lower prices in this industry. While I am really excited about the technology behind our Zoho services – compare the ease of use of Zoho Creator against Salesforce AppExchange, for example – I am even more excited about the low prices we can bring to this market.