The business of ERP and Pricing it right

@Pawan is write it might fragment core if more users move out of Frappe.

With the new price tag there will be a increase in expectation from Frappe in terms of support and correcting bugs. Adding new features as things move forward.

None of that will matter for the users discovering ERPNext for the first time. It may in fact reflect the confidence Frappe has on ERPNext.
Nonetheless, as a current user I would have liked the price increase to be more gradual.

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If the reason to move away from Frappe is price (they want it cheaper), it is highly unlikely they will have anything more than a generic install of ERPNext. Not a customized version. So the code fragmentation as a result of Frappe’s price is not a 100% valid argument.

If someone wants a heavily customized install, Frappes’ old plan would have not been the right one anyway. So the fragmentation is not a result of the pricing, just a result of the customer needs to fragment.
It was not prevented before and wont be prevented now/or in the future.

What can be done is, to bring back the fragmented features into the main branch. But like I said, it a challenge that the foundation will face because of lack of full time resources to chase it down.

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This is not true i guess. Frappe only support core implementation without much customization. For anything customized beyond the core, frappe was not hosting them. As they wanted to promote everything into the core and also better to manage hosting.

The fragmentation idea is about people who wants the plain vanilla version also moving away.

Anyway, only time will proove if this was good or bad decision. Since frappe is for profit, it’s their own business call as to what is worth their time.

Thank you for taking time to compile the list. The best part of abacus or any other system where per-user pricing is mentioned, it looks more appealing. Instead of offering $1500 for 10 users, if it was per-user, might be the impact wouldn’t be too hard for early adopters.

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I think the price increase was a good move speaking from a North American standpoint. I’m based in Canada and making the pricing more in line with industry standards definitely improves the impression of quality to a customer - especially now that ERPNext has been recognized by Gartner. I just had a talk with a consultant at BDC (largest financing resource for entrepreneurs in Canada) and he believes that $1500 is a competitive price point for a company serious about implementing an ERP. It looks like Frappe has looked at their customer base and made a clear decision about what market they want to target, which is a great strategic move. There will still be a market for the cheaper self-implementations, it’s just a different market that may not be as profitable.

I also agree that the $1500 price may be prohibitive to smaller organizations. Possibly a monthly payment option ($125 minimum) with a 1 year term may be more attractive to those customers and still align with the pricing strategy. The maintenance and setup costs wouldn’t make sense if they were to price it any lower per month.

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I offer free and early stage for startups alternatives :slight_smile: I am still experimenting my business model. check it out.

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Its starting to feel like the project will soon have a Community version and a Commercial, only the later having all the features.

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I don’t think that would be the case as the community is committed to being open source

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You can self host the same version of erpnext for free.

If you report an issue for bug or feature request, when it gets solved it’s merged into core product and all the community can benefit.

It is truly free and open source project. It will remain free.

At a smaller scale you won’t even need backup / redundancy servers, dev-ops, quick customer support.

Whenever you need all those things as an enterprise, frappe team is the best in business for cloud hosting.

Shameless plug for MN Technique :grimacing:

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I am not sure what you base that on. In fact I only run a stable version. And plan upgrades only for security reasons. Without mods to the code base. My version is the same as the one you could download from git :slight_smile:

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I said “soon” not that it was now the case.

I’m basing it on the price increase and @rmehta post.
Some of the things stand out, like the target demographics (200k to 1M biz), that a free desktop application is being built for solo entrepreneurs and startups and that they are keen to start the differentiation

The OSS version is exactly the same as the paid version, you know that right? Code is free. Hosting it and giving you support is not. The developers still need to find good lives.

Yes the business requirements are different hence the differentiation and various versions. Doesn’t mean it won’t be free or OSS.

I have 100% faith that most people will contribute back. In fact if we don’t fund the foundation better it might be a struggle to absorb it into the core

That’s a problem. Maybe a good problem to solve for.

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We are a small business based in India and we moved from Tally to Erpnext because its awesome and the pricing was very reasonable.

We paid Rs 25k for 10 users this year and now we shall have to pay Rs 90k for the same.

The new pricing may be okay with american or european customers but may not be for others.

Erpnext was earlier supposed to be an affordable alternative for small companies to other costly erp solutions in the market.

Why I got attracted to erpnext was that I felt that the cause is very noble and the goals are not solely commercial.

Erpnext should aim at being an ERP for all and not just another option to choose from the list.

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I think the email for pricing clearly mentions that rates for current customers do not change but you can email support@erpnext.com for your pricing queries.

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Yes its for all. it is still your responsibility to learn and install it yourself. And manage it. The code is still free.

Else you have to pay a fair price. And what is offered is at 70% discount compared to others. check it out yourself.

And like you who wants to run a business and make money and have a good life, save for the future, educate your children, take care of your parents, go on a holiday, others ego develop have similar wishes.

It needs to be sustainable. They give away plenty already.

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I am sorry if I have hurt anybody by my previous post.
I just want to suggest that its better to keep the pricing low and make Erpnext reach more customers.
Try increasing revenue by increasing volume and not price.
If practical, create an affordable option for a 3-5 user entry level subscription.

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This is where I believe you are probably mis-reading your potential customer base.

If you target the business with only 2 to 3 total workers, then you MAY be safe with your assumption.

However, my experience differs greatly as soon as the number of employees/workers in a business exceeds approximately 12 users. At this point the current Frappe Business Model becomes a burden to the potential customer.

They already spend a great deal in just trying to keep their employees focused and on task so their business thrives. So, why does the Frappe Cloud Business Model fail at this size business???

It is because the Frappe servers are updated far to frequently with changes in the core ERPNext system. The client business owner cannot possibly keep up with retraining their users with the new features or the changes to the old features.

In 6 of my last 8 implementations of ERPNext, when offered the choice of Frappe Hosting or of my more expensive version of hosting it for them, they choose my more expensive hosting option. In every case of the 6 that chose my hosting is was because they could NOT tolerate the disruption to their businesses that the constant changes in ERPNext core system would impose on them.

Frappe Cloud hosting does not give the cusotmer a choice to stay at their originally installed version level. All versions changes (even if they include bugs) are forced onto the cloud customer and they must begin again learning what is different in their system.

All of this relearning takes up valuable time from a small business.

So, to help you understand this a little better, let me share some of the statistics of the 8 businesses I used here as the example.

  • the 6 that could not tolerate the constant changes were all in the range of 12 to 27 employees that would be users of the system.

  • all 6 businesses were between $4 million and $11 million in gross revenues per year.

  • 4 of the 6 businesses required that I support them at their installed version for a minimum of 3 years. The other 2 of the 6 required only 2 years of the same version.

  • The 2 businesses that were relaxed enough to only require 2 years of the same version level were also the 2 at the bottom of the revenue numbers in that group of 6 and had the fewest people to train each time.

  • The 2 businesses out of 8 that did NOT make the requirement of me to keep them at their originally installed version level, did “request” no changes in version for the first 6 months. They were both also less than $500k in revenues per year and 5 employees or less.

  • These 2 smaller businesses ultimately chose my hosting for themselves because it also came with my real time assistance if they have problems. They would not have to wait for a “service ticket” to bubble up to a technician for resolution. They can call me direct and get me or one of my implementation techs on the phone 24/7. We are local to them and can even provide on-site training or assistance if needed.

  • Getting back to the 4 businesses that required a stable version holding for at least 3 years. All but one of them required me to provide at minimum 90 days of testing server access with any new version prior to making the change. The one other in this group required 6 months of test server access.

This last requirement is probably the most difficult to meet. It means that I must find a way to create my own repository at the version point of making the 90 day (or 6 month) test server for the client. If they decide to move forward with the version change, I would not be able to pull whatever the most recent version was after the 90 day time frame because ERPNext core changes faster than that and the fresh updates would be different from what the client tested for 90 days.

In conclusion, the customers that I have been servicing are already familiar with the offerings of other ERP systems and are at least a little educated about the things that can go right and wrong with a system implementation. This has changed how they look at such a major software integration into their business.

So, I know this probably offends some of you. However, this is my actual experience. Your mileage may vary, but do not delude yourself into thinking that you can convince your customers to allow you to be constantly changing their system as ERPNext grows each week. In fact it would not surprise me to find that some of your customers that experience those changes for a while will grow tired of your service and seek an alternate solution. Probably not because of the quality of the software, but because of the quality of their user experience.

I found that STABILITY is more important than features to almost ALL of them, and PRICE did not have very much influence here. They ALL paid more for my stability offering.

Hope this helps someone.

BKM

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Possibly the “Enterprise Custom” plan with “dedicated server” on Frappe / ERPNext hosting could help fill this void.

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Thanks for sharing the numbers. Really glad you were able to get a good price for ERPNext. This kind of validates our model.

Btw, is this a good time to ask for a nice contribution to the community in terms of a gold membership :wink:. I am sure your customers can easily afford it too…

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I am on a continuing contribution. Even as I write this, there are developers that you probably know on a first name basis that I am paying to make improvements to ERPNext. Every customization or improvement I have them write is always done with a github PR. That is how some of the improvements to the POS module were included in thelast version update.

Rather than send money to the foundation, I am putting my money to good use for the benefit of the community at large. When things quiet down some and I cannot think of more stuff to have written and contributed, then the membership will be appropriate. Until then (as I have for the past 7 months), I will continue to spend the $$ with the developer community through paid github pull requests.

It’s kind of my way of contributing without the fanfare and badges of a membership.

Will I be a member eventually? Yes of course.

BKM

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