Paying for a fair share of cloud

On January 27, 2012, in news, by

<please note, this isn’t anti cloud, rather it’s a plea to vendors to provide value for services>

For background, see this post

If you hired me and I did work for you for several years and then I came to you and said that I’d be bumping up the price by 1400% (that’s not a typo) would you want me to justify that what you provided to me increased in value that much as well? 

You know what bugs me the most about putting key business assets lock stock and barrel inside of cloud deployments?  It’s the problem that OpenDNS just showcased to me.  I’d better have an exit strategy that is relatively painless otherwise I’m going to be scrambling to exit should my cloud vendor jack up the price tag.  I’m guessing that OpenDNS’s major shift in pricing is a sign that their venture capital firms want the free ride to go away.  That they want value as well for the dollars they are investing.  Fair enough.  Fair value for what they do.  But that’s the thing, right now I have no idea of OpenDNS’s business model.  I wanted to pay to ensure that the company stayed financially viable.  But I have no idea if $1500 per year is really what I cost to OpenDNS or if it’s a means to get rid of small companies like mine.

It’s the concerns I have regarding the pricing plans and options of offerings like Office 365.  Microsoft doesn’t release the details of the financials behind Office 365 so I have no idea if the price per mailbox I’m seeing now truly is a reasonable fee for the product or if they are loss leading the prices to suck in customers.  Getting onto cloud services is relatively easy.  Getting off, perhaps not so easy.  In this case of OpenDNS, they are not sticky enough and hard enough to migrate off of, nor (in my opinion) provide $1500 of value to my firm that I can’t find elsewhere for much cheaper amount.

But it’s that “are you really making a decent living from what I am paying you or are you going to jack up the price tag once you no longer have your cash cows of Windows and Office to carry the load” that honestly concerns me because I have no means to make that decision based on the financials of Microsoft – and I’m a shareholder.

So all of you cloud vendors that want to get me on board as a smb customer?  Charge a reasonable price tag for your service up front.  Don’t loss lead it.  Don’t discount it so much to get customers that when you finally do increase the price tag for what it actually costs that you give your customers heart attacks. 

And ask yourself (if you are a big company), put yourself in my shoes of making decisions.  Would you pay what you are asking me to pay?  If you increased pricing, would you also consider this unreasonable?

I think even would be shocked if he was paying $1500 for protecting just himself and no one else.


One Response to Paying for a fair share of cloud

  1. Joe Raby says:

    Resellers might be able to get customers into the cloud hype but the margins are razor thin. A customer can change the reseller listed on their account at any time too, meaning the original reseller may not make anything on the sale if the customer decides that someone else should get the cashback from Microsoft. Also, margins get cut in half after the first year.

    The good part is that you don’t have to go through distys like you do with VLA’s. I wish you could order VLA’s like this. The contract is between the customer and MICROSOFT. Why are we dealing with a second middle man to go to Microsoft and get paperwork for the reseller???