A Great Example of SugarCRM’s Value Model in Action

Things are ridiculously busy here for a Friday…but in my 5 seconds of downtime I came across this great BusinessWeek article that describes the thought processes behind utilizing open source software. It’s great because it explains the way that smaller businesses get great software that usually is reserved for larger business via the OS model, but even greater because it uses a SugarCRM customer as an example.

The best part is here:

If you find software you like, paying for an upgrade may make sense. For University Readers, Sugar is the go-to tool for sales, marketing, and project management. Recently, Hamadeh decided that he needed some advanced reporting features that just weren’t in the Sugar Community Edition. Sugarcrm, which makes the free program, also has a product called Sugar Professional that met Hamadeh’s needs. He now spends about $5,000 a year so 18 of his employees can have access to Sugar Professional. But after getting a free ride for four years, Hamadeh has no complaints.

No complaints after getting the software for free for years. That is important. A lot of people question our model a lot, and seem skeptical when I explain that in many cases SugaRCRM proves its value through Community Edition and customers are happy to pay once we show we are a robust, scalable and reliable CRM solution.

Shocking, right – to think people will pay for something that works.

I think really, people equate a lot of next generation open source applications and the free model with the early internet economy (or lack of one).  But the early content and communities on the web did not offer much value, just a lot of static data, or lame video or other content that was not always valuable to a business. Individuals may not wan to pay for stuff they can get for free, but businesses fully understand the value inherent in our commercial versions.

They must, or else we wouldn’t have convinced more than 3,000 companies of that value in less than four years.