Salesforce.com – Going Global with SaaS at the Expense of the Customer?

As a former analyst, one of the highlights of traveling and interacting with our partners is that I get to listen to a lot of stories about the realities of the varied markets in which we operate. Talking about our recent events in Lisbon and Madrid, SugarCRM co-founder Clint Oram made an interesting discovery about international pricing of one of our competitors.

When discussing pricing for comparable CRM products, a partner made us wise to the fact that Salesforce.com is actually priced higher in Europe than it is in the US. This is not a currency conversion issue, the product is simply listed as higher ($125 per user vs. 135 Euros for their Enterprise edition for example).

Interesting.

Of course, my mind started racing after hearing this (but honestly I was more annoyed at my own laziness for not knowing this already – some competitive intelligence guy I am right?). Why would a company with so much perceived market visibility have such a higher price point in an emerging market? Why not come in lower, to completely shut out local or at least localized competition? After all, a lot of the EU is not doing so hot economically – yet Salesforce.com sees fit to overcharge potential EU customers. That is, charge them EVEN MORE than what I believe is an already too high price in dollars.

But, this inflation in price makes sense considering Salesforce.com’s model. As a primarily direct sales organization, Salesforce.com has a much higher cost of sales when it comes to going global: around product localization, hiring and maintaining a sales force, marketing etc. Thus, that high expense is being passed on to the customer. Bummer.

This is in sharp contrast to a model like SugarCRM – where we have great partners who take the product to the streets with localized product, domain expertise, etc. This enables SugarCRM as a product to enter more markets with less friction. And this lower cost model means that the end user organization pays less, and gets more.

And that is definitely not a bummer.

2 thoughts on “Salesforce.com – Going Global with SaaS at the Expense of the Customer?

  1. Pingback: CRM Outsiders » Blog Archive » The “Cost of Doing Business” vs. the “Cost TO Your Business”

  2. I do agree with all the ideas you’ve offered on your post. They are really convincing and can certainly work. Nonetheless, the posts are very short for starters. Could you please lengthen them a little from next time? Thank you for the post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s