So, there is a product I like – ok, I *really* like.  The only problem is that they don’t quite ‘get’ small business.  They were really close.  They had a fair price per license on their software – but they required a minimum purchase of 25 licenses.  But – they did have a free version.  It had the same functionality as the full product – the only difference was that it was limited to supporting 10 clients.  The free version was great for so many of our customers, that were within the 10 client limit.  However, as soon as you passed 10 clients, you had to purchase the full, 25 license version.  We have several clients who are sitting at 11-15 seats that could benefit from the software – but they can’t justify paying for 10 licenses that they’re probably never going to use, so they don’t buy it.  I’ve emailed the company several times asking for them to consider removing the license minimums and letting us by exactly the number of licenses we need, no matter how small.

Well, just tonight I noticed that this company had released a new version of their software.  So I went to their download site, downloaded the free version and registered for a license key for the free version.  I received the email message with my license key, and as I read it – I discovered a significant shift from the previous version:  Specifically, the free version of the new release is still restricted to only 10 clients, but now it is only valid for 45 days as a trial.  No more free unlimited-use version for up to 10 clients.  So where does that leave my customers with under 10 clients?  Well – they aren’t going to buy 25 licenses – I know that.  So for one, we aren’t upgrading :^).  Two – we’re going to have to start looking at our options for replacements. 

I’ll admit that I’m stumped.  I just don’t get it.  The SMB market is the hot target market now for technology.  Yet so many big players are trying to penetrate the SMB space, but they can’t seem to ‘figure out’ SMBs.  At a basic level, the SMB space is actually pretty simple:  provide fair pricing, don’t make us buy stuff / licenses we don’t need, and don’t hold us hostage by making it impossible to migrate to a different product down the road.  I don’t know if that goes against everything that was drilled into the enterprise managers and marketing directors during their MBA courses, but so many of the big players just can’t seem to be able to grasp the simple concept of TRUSTING THEIR CUSTOMERS AND TRUSTING THEIR PRODUCT.  That’s one thing about SMBs – you don’t market to the SMB space by traditional means.  We aren’t going to seminars – we have a business to run.  We aren’t going to take your cold call – we’ve got three paying customers on other lines.  We’re not going to notice your direct mail campaign – it’s going to get pitched along with the random catalog, mortgage offer & pre-approved credit card application.  No Thanks.

So just where do SMBs learn about solutions, and who do they listen to?  Other small business owners, of course!  The people who know and understand the unique challenges we face every day, because they’re dealing with the exact same issues.

So for those companies that want to crack into the SMB space – just what do they need to do?  First – most need to change their pricing structure / licensing.  If you could chose between selling 1,000 widgets for $100 apiece, or selling 100,000 widgets for $20 apiece . . . would you rather $100,000 in sales or $2,000,000 in sales?  Take my product above.  We have two customers with between 20 & 25 clients who have purchased the full 25 client version of the software for over $600 (approx $25/seat).  At last count, we had approximately 17 customers using the free version (representing approximately 130 clients).  I know that I could sell the software to each and every one of those customers if they could buy the exact number of licenses they needed – or approximately $3,250 in sales for the software vendor – and that’s just from the customers who are using the free version.  I could sell it to my customers with between 10 & 20 seats as well.  However – with the 25 seat minimum purchase requirement – I’ll be lucky to be able to get one customer to buy it.  

The problem is that most companies require minimum purchases (blocks of 25 / 50 / 100 licenses).  If you’re a small business with 10 users and no plans for growth – are you going to buy a solution that has a minimum purchase of 50 licenses at $30 each?  No way – you’re effectively throwing away  40 licenses that you’re never going to use.  And what is it with minimum license purchases anyway?  That type of requirement does not benefit the customer in any way – the only possible benefit is to the vendor in forcing the customer to buy more licenses than they need.  What so many larger players don’t realize is how much business they’re losing because of those minimums – especially where the SMB market is concerned.  Throw those minimums out the door – let customers buy the exact number of licenses they need – regardless of how little.  Let that mom & pop business buy the 3 licenses they need . . .   and when they add another employee a year down the road – let them buy a single license – don’t force a 5 pack on them.  Software vendors are painfully aware of how much software piracy costs them.  Are they aware of how painful it is to their small customers when they force them to buy licenses they don’t need??? 

Provide fair pricing.  Retire minimum license purchases.  Support your product!!  We’re all human – we make mistakes.  If there is a problem with your product – admit it, fix it and move on.  Take care of your SMB customers, give them a good product at a fair price, and you’ll effectively be hiring a whole new sales force.  SMBs talk to each other – and they talk shop.  They talk about what products they love – and they talk about the products / vendors they dislike.  Get them loving your product – and they’ll talk to each other, and the sales will start coming to you.  Keep your head stuck in the enterprise model of minimum licenses, forced support contracts, etc. – and you’ll stay on the outside looking in at the SMB space.