Once upon a time, long, long ago, DysfunctoSoft had a simple little price list. It could be described in a paragraph. Buy our server and pay $XX,XXX per machine. Buy our companion client-side tool and pay $YYY per instance. Simple.
And then came the inevitable. Customer A started whining: DysfunctoSoft, we like your product. But it is too full-featured for us. We don’t want to pay for functionality we won’t use. We want to pay less.
Instead of recognizing the whining as a simple price negotiation tactic, what do you think the big cheeses of DysfunctoSoft decided to do? Did they tell the sales person to do a better job of selling the product that actually existed? Did they attempt "value pricing" or offer Customer A a discount so the price would fit the project’s budget?
No. Of course not. Because those options are just too frakin’ simple. And too cheap. You see, DysfunctoSoft always likes to do things the arcane way. The expensive way. The way that is most likely to confuse the fuck out of customers and the sales people and pretty much everyone. The way that is most likely to increase the cost of BOTH sales AND product development by tenfold.
So what did they do? The big cheeses of DysfunctoSoft ordained that a NEW product be created, a variation on the original. This NEW product shall have less functionality than the original, and shall be offered at a lower price.
And it worked. The deal closed.
And then the very next customer, Customer B, said: You know what, we like your stuff, DysfunctoSoft. But the original product is too much for us, and product variation A doesn’t do enough. We need something in between and we don’t want to pay for functionality we don’t use.
And so the big cheeses met on Mount Olympus yet again. In between sips of ambrosia, they commanded that Yet Another Product be created, against the strenuous objections of the predecessor to the Cranky Product Manager. Product B would have less functionality than the original and more than Product Variant A, and offered at a price in between the two. Customer B liked. And Customer B bought.
And you can see where this is going, right?
N years later, DysfunctoSoft now has product variations A through ZZZ. All slight variations of each other. Each has a moniker meant to distinguish it from the rest, but instead it serves to confuse the frig out of everyone: "Lite", "Starter", "Ultimate", "Standard", "Enterprise", "Developer", "Advanced", "Professional", "Professional Plus", "Basic", "Premier", "Express", "Personal", "On-Demand", "Workgroup", "Home", "Business", "Desktop", "Premium", "Basic N", "Unlimited", "Datacenter", "Foundation", "Framework", "Mobile", "Community"… The list goes on and on. Naturally, there is no consistency in the naming. That would make too much sense. What the frig do all these terms mean anyway? Especially when the "Unlimited" and "Ultimate" variants aren’t as powerful as the "Enterprise" or "Pro Plus" or whatever. And how the hell are the Lite and Basic and Express and Starter editions different?
Not only that, each of these products can be licensed in a myriad of ways: per instance, per customer site, per server, per processor, per concurrent user, per named user… It is difficult to think of a licensing method that DysfunctoSoft does not support.
Results?
The price list is now enormous, pushing 200 pages or so. No one can understand it. Especially not Sales Droids. They join DysfunctoSoft and then quit/get fired within a year. And then it’s time to train a new Droid. It takes them MONTHS to finally internalize this nutso product line architecture. Without their guidance, customers can’t understand what to buy or how much it costs. Forget a consumer sale, a self-service sale, or one driven by website research.
Product Development is getting crushed underneath the weight of all these product variations. Although they all largely use the same code base, there are significant differences that have impact throughout the behavior of the products.
And because the names are hard coded into the products, manuals and marketing collateral, despite a concerted effort NOT to hard code them, it is now impossible to change the names to more sensible alternatives.
The QA effort required to test all these products on all the support platforms has gone through the roof. It seems that for any new release 60% of the effort goes into making the licensing more intricate and trying to automate this crazy product variation structure via license keys or elaborate build systems.
What else? Support costs have skyrocketed. As have documentation and training costs. Marketing costs too. The Cranky Product Manager is sure the effects do not stop there. Oh what joy it must be to handle the accounting for such a needlessly massive product line. Or the financial forecasting. The auditors probably have a grand old time billing DysfunctoSoft after sifting through its cornucopia of transactions attributable to each product and licensing option combination.
The Cranky Product Manager truly, honestly believes that DysfunctoSoft’s latest troubles are primarily due to the explosion of products that are not truly differentiated. It’s treading water, trying to keep its head above the continually crushing waves of a massive code base. There is no time to actually create value for your customers when you can barely maintain what you already have.
The Cranky Product Manager knows that DysfunctoSoft is hardly alone. Even companies like Proctor & Gamble are lured to madness by the siren of product proliferation and endless line extensions, paying dearly in the end for their lack of discipline. Every software company the CPM has ever worked with has suffered the same illness. But those companies were still in their early years, suffering from Stage 1 or Stage 2 Product Proliferation. Alas, DysfunctoSoft has an older product line, and is now suffering Stage 4 Product Proliferation: malignant, inoperable and infecting all organs in the body.
Perhaps it is time for the Cranky Product Manager to start working on her resume.
{ 10 comments… read them below or add one }
Totally missed you and your brand of humor. Thanks for bringing me out of depression!!
This is called ‘being witty’.
I too have suffered a similar situation. Perhaps you can relate. It looks like my predecessors allowed the Engineers and Sales Managers to bypass any product management and created dozens of specialized features for the purpose of closing deals.
After a couple of years of this madness, we need more head count than these “fixes” are worth. I am not surprised. So, last August, the new Development Director and I (newly assigned to this product) declared that no new one-offs will be entertained. We put up a wall.
Since this edict, there have been no new one-offs. We have produced more output from Development in these last six months than any 12 months prior. The distractions are gone, and we are focused. And Sales still made their number. Sort of makes you go hmmmm.
The joy of trying to hard to please everyone in a non-personal manner. As you pointed out, discount pricing or value-added sales techniques could have worked better. But rolling a ton of products to fit a variety of niches that may be used only once is a waste of resources. An approach like integrated product management might have helped as well.
Great post!
“Versioning” on its own isn’t a bad thing – in fact it’s a really good thing. Selling a customer a solution that makes sense for them, as opposed to selling them a great big steaming pile-of-features, is good for everyone.
That’s one of the reasons licensing software that turns features on and off based on the parameters defined in the key has been so popular.
It’s also a reason why smart product marketing people articulate a brand architecture up-front, not after-the-fact. Knowing what feature set your low-end user wants and how that compares to your high-end user allows you to create products that version easily using tools like entitlement keys.
I agree that “one-off” products are bad. The only thing worse than selling no licenses is selling one. But that’s why you specify your versions and the feature sets that are associated with each of them – so you can balance manufacturing convenience with market requirements for relevant versioning.
OMG. This sounds EXACTLY like a company I worked for with a very famous narcissistic CEO at its helm. I hope you’re not working for Mr. Narcissist CEO and enduring the “creativity” of the idiots that decide to strategize and rebrand product acquisitions galore! Hilarious stuff by the way.
Well said CrankyPM. We have also faced exactly the same situation and the best way to probably go is an ability to do feature on/off depending on the license provided…The Sales shud also do some extensive market research to provide input back to the product team on market segments as well…
Now we know….top management with ears cut off exist in almost every nook and corner
There’s a lot of merit in having different editions of a product–Good, Better, Best seems like the easiest model to follow–but you have to design them into the product from the beginning. Otherwise…Oh, the pain!
As usual, Cranky Product Manager, you’ve put your finger on an important issue in an acidly funny way. A lot of tech companies just can’t see the value of simple products, and their response to the demand for simplicity is more often than not counterproductive. The fun begins with denial that customers really want something simpler than what the company offers.
Just because you are good at humour does not mean what you say makes sense all the time. I think you have identified an aspect of product companies which one needs to guard against, however you have looked only at one side of it.
“Editioning” is good in general for the outside world, this way a given prospect customer is most likely to get what he needs or close to it. However, what can end up happening in that once the precedent is set, every junior/ middle level manager worth his ambition decides that he has identified a market innovation opportunity with which he is going to bottom feed. And organizationally, there are not many ways to stop that.
I have heard of CEOs who zealously guarded their basic value prop and basic product offering and simply allowed competition to come in, sometimes even overtake them from positions of strength in other segments.
So it is not a no-brainer, is all I can say – but like most things in life, a good discussion topic!
@ktwalks @crankypm lists virtually every option in this post. http://bit.ly/2GuHv
#prodmgmt
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