General Consultant Discussion

How do you respond to prospect question of rationale for upfront fee with 100c subscription pricing?

Which upfront fee are you referring to? Activation fee or Up-Front 1 Year or 3-Year term?

Sage seems to be struggling with explaining the $2,500 activation fee for new 100c customers as well.

Both. But activation mostly. I liken it to leasing a car but that seems lame.

From a solely investment analysis, this is similar to a fee paid on an auto lease which lowers the monthly payment. It seems lame, but it is something most people can relate to. Note that the 100c monthly rates are lower than the previous 100 subscription rates. Explained that way, prospects have been satisfied with the answer. In other cases, they have not questioned it.

I really don't think you can explain it rationally. I would say something like, ""Sage is greedy"". Oh wait, no, you can't say that. How about, ""it's a paperwork fee?"" No, wait, you should tell them it is almost a pass-through fee since your commission and two-year tier credit are awarded based on that fee. Yeah, that's not a good idea. Hmmm...I think the only way to pitch it would be to use @JohnHoyt 's explanation of a buy-down. The biggest problem with that buy-down is that technically there needs to be an alternative way to purchase the product, and according to Sage, there is no alternative. At least, we aren't supposed to tell people about Perpetual. And, why would you tell people about Perpetual when it is an inferior product to Sage 100c. That's it! You can tell them the activation fee is to get the 100c product instead of the inferior 100 product. I knew I could rationalize this if I asked enough questions and talked in circles. It's almost brilliant!!! :-)

@BrianKelly too funny. And, sad but true. I was hoping for some rational explanation. I guess that's an oxymoron.

The rational explanation is either Sage prices it this way or the monthly/annual payments are higher. As time goes on they will be grateful for the lower payment. If it is a large system, they also may decide to capitalize this fee. For those customers we have had that are part of large parent companies that do not want this type of investment hitting the balance sheet, it would be advantageous to have an option to increase the monthly, as an alternative to the activation fee, but I doubt Sage will make that change.

WADR, this is complete nonsense. The first time the prospect asks why they don't pay a fee for O365, Salesforce, MailChimp or virtually any other subscription type product you best have an answer prepared. The two rules of business (1) customers aren't morons and (2) see # 1.

The honest explanation: That's the way Sage has chosen to price it.

Yes, and that is exactly what I tell prospects when I present pricing - there is an activation fee per user ($500 to $800 depending on bundle), and that is the price set by Sage.