Hi All, Not sure if you all got the newsletter from Frappe for ERPNext.com.
The price per user per year has gone up by 250%.
First of all, congratulations to Frappe for really trying to move away from cost strategy (like Dell) to a product differentiated strategy (like Apple).
The pricing down to the bottom might have helped Frappe get into the market but it didnt capture the full value, especially while everyone else is offering parts of ERP system at $50/user/month or above.
Since the benchmark / anchor price was so low :
negotiating with potential customer was difficult
size of the pie was so small it would not be worth it for new entrants (Service providers)
learning curve was still quite steep (not as much as SAP, but still) // customers dont realize it
Overall it was a bit discouraging.
With the new price, it increases the “market capitalzation” of ERPNext as a product.
And it becomes healthy / lucrative for new service provider to enter at a lower cost (for demostrating their ability and still make money) and gradually improve prices as they gain experience.
Agree on not selling one-self short but this may further incentivize cheaper self-hosted cloud clones of ERPNext, which are already available in plenty in the market.
I never said there is anything wrong in it, did I ? I just am throwing in alternative thoughts.
The self-hosted clouds would obviously already reduce the market share that goes to Frappe / ERPNext hosting and this would give them a cost advantage because of the increase in price. Of course, if Frappe / ERPNext strategy leans towards being exclusive like Apple then it does not matter but yes Apple has copyrights in place but ERPNext is open source.
Self hosted clouds would further build local / regional extensions without contributing it back, which already is happening eg: Payroll extensions etc. Further incentive for them to grow their own cloud and not contribute back to the core product.
I think we need to see the difference between red ocean (win-loose) vs. blue ocean (win win) situation.
Cheaper vendor wont eat the market share of Frappe
as they have moved away from the dell business to apple business. Aka, it is not their target anyway.
this is reflected in thier pricing decision // cheaper customer that provide learning is not so important to them
I think more service providers will fill in the gaps due to proximity, language, special requirements, slice and dicing the offerings
In the long term more Dells for the short term. Before people branch out and carve out thier own niches.
Although there are some that are not sharing there are others sharing thier local versions.
Ex : There is a Swiss version on Github with bank reconciliation.
We can make assumptions about the community. If we do, lets make positive assumptions.
That many are benevolent, most as passive and some neither.
Also need to remember, lots of submissions are never picked up by the foundation into the core for many good reasons
does not fit the monolith model
does not have sufficient resources to dedicate
…
If the foundation needs to step up and absorb what is already there and make features optional, it needs
high quality developers
10-15 full time developers
2-3 managers to oversee operations
1-2 full time visionary leaders
It is a fairly complex, beautifully designed, organically built system.
As developers & visionaries, Frappe + Foundation + Community will have to constantly revisit the operations and see if it is the correct operational direction and make choices in some areas
Growth vs. Stability
Build or Absorb
Monolith or Integrations
Maybe it can check all the boxes. But will need just more resources.
Overall, I see that ERPNext will do for ERP what Linux did for OS.
Thanks everyone for your comments. This is something new for us too. We took a hard look at our customers and we realized that ERPNext is definitely worth the value.
Any small business with 2-3 full time employees that has a revenue in the range of $200k - $1M (US) is a great candidate for ERPNext. A 10% benefit in savings, or 10% increase in sales would easily pay off investment.
Also most businesses realize the value we provide => ERPNext + support + hosting + upgrades + backups + redundancy is easily worth $1500/year for 10 users. We are betting that most users will go for hassle free hosting with erpnext.com with guaranteed support and updates.
And we are not pricing out the lower end either. We are working on the desktop application that will be completely free. May not have feature parity with ERPNext but it will definitely help the solo entrepreneurs and startups. Hence we are also keen to start the differentiation.
Also at this pricing, we are still the lowest end of the market. This is not premium pricing at all. Also as @Pawan and others pointed out, ERPNext is not defensible like Apple, since it is free and open source, so I am not sure the comparison applies.
The truth about Apple is that they win because they have a great product. Finally, its all about the software, whether its GMail or Mac that wins, pricing and positioning are ultimately not so important. Great quality, performance and design is the key.
The old price was making ERPNext special and unique, that tell us ERP for all.
Please try to add another plan (starter plan) with 5 user and with reasonable price, let say 500$.
I love ERPNext and I need to make it best ERP.
I also support having smaller plan. In the developing markets, hosting charges of $1500 per year is an adoption barrier.
But as other stated above, it will give other service providers option to clone and sell it as cheaper ERP, which is definately not in the larger interest of the community.
Actually that was not my point. others cloning and giving entry level prices is good for the community. Specially entry level providers. its a good match.
I still think Frappe is at about 70% discounted to its value in the market hands down. If anyone is bargaining for more they can try the self hosted option. Its FREE!
Whom are you comparing for hosting and server management services for claiming to be 70% cheaper. Please share links for some other provider to get convinced to convince others.
Then there is SAP, which is the ambiguous offering. Sap HANA. Not sure if it a HA (Yes…) or a NA (No…)
If anyone understands post here.
The journey has started…The movement is there.The community is there…A few things that helped Linux was an anti-incumbent sentiment against Microsoft and its licensing…and its unwillingness to cooperate with open standards. [You can see that has changed now]. Also everyone remembers BSOD.
So what will happen to Odoo or SAP from how the perception goes will have a lasting impact on ERPNext. Luckily for them they have been able to adapt a bit and catch up [microsoft was creating FUD about Linux at the same time]
That being said, the foundation is finding its feel with valuable contribution from key people.
But more needs to be done.
