Community Platform Pricing for New Clients

If you’re a white label social network vendor, you’re likely getting many new clients at corporations that have special pricing needs, let’s discuss this scenario.

Yesterday, I spoke to a white label social network who had some challenges pricing their product for their corporate clients. I speak to both vendors and clients, so it’s interesting to hear from both ends about concerns, triggers, and final deals.

There are a few ways to approach pricing your social media product for corporate clients, you can do a fixed amount, a layered pricing model (buy as you need), variable on performance (pay as you consume) or a combination thereof.

I’ve found that for new programs (like social media) these are often experimental “new media” budgets and although these products and services tend to be inexpensive, there are still some pricing considerations you must be prepared for. Most corporations issue quarterly or annual budgets to business groups, often with a fixed amount. If you require additional funds, you’ll have to present a business case to management, which can also take some time, as well as be a headache to validate one’s new business programs.

One additional factor is that budgets that are not entirely used up, they get recaptured by the umbrella organization, and could be an indicator that the business group doesn’t need further funds, resulting in reduced budget the next quarter. There’s an inherent risk here as well, as if all of the budget is used up on primarily a single vendor, the ability to have flexible spending for other services is limited. I draw these factors from both my experience having a small budget for social media as well as speaking to many clients on a similar front.

In my vendor product catalog (which will publish soon), I can see that there are many different pricing models happening for the white label social network industry, while there are many different pricing styles, perhaps the most common is fixed band pricing (fixed monthly fee with low variable by user).

If you’re a white label social network and are getting push back from clients about pricing and you’re not sure why, you should examine your pricing offer. For situations like this, social media vendors should experiment with fixed price bands (rather than variable by usage) so that business groups confidently purchase and keep within their budget. Then, as the program grows, the client business group won’t have to go to management when costs exceed their budget in early stages of this program, and then having to demonstrate success.

Of course, when the community platform shows high degrees of success, the opportunity for increasing support, hosting and pipe capabilities, and other services (including pay as you use pricing). So in summary, keep it simple, when dealing with corporations who are just experimenting with community software, offer a set or fixed price, at least till the community is up and running.

I’d like to hear from you, are you a vendor or a client? What are effective pricing models for new business programs (esp social media)

This entry was posted on Tuesday, July 15th, 2008 at 4:21 am and is filed under Social Networking, Web Marketing, White Label Social Network. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.