PIM Pricing: A race to the bottom

The common theme of this week with both partners and customers has been the topic of PIM pricing. The number one question that all PIM buyers are rightly fixated on: How much does it cost?

A race to the bottom refers to a competitive situation where a company attempts to?undercut the competition's prices?by sacrificing quality standards, or reducing labor costs.

We're witnessing one of the noisiest, price competitive solution markets in digital commerce. This is making things difficult for customers, software vendors and service businesses alike:

For customers

A race to the bottom pricing strategy is bad for buyers of PIM software. There is often more emphasis put on the cost (based on individuals in the buyers organisations own perception of the cost a PIM should be) rather than proper due diligence around functionality, maturity, integrations, implementation. Customers will learn the lesson late on in the project with a platform that simply does not generate ROI, or at worst fails entirely.

For software vendors

Vendors are finding it harder and harder to position their solutions in an apples for apples way in their target market as there are literally low cost, limited feature & less mature platform entering markets they are simply not built for. We're seeing low cost entrants into the UK market for example with 0 customer base and a total lack of enterprise experience winning large customer deals in a vertical they have limited exposure to all because they are undercutting by a factor of 2. All of this bodes very badly for a successful project.

For service businesses

The challenge here is the perceived cost value of using a partner, or service business to deliver a PIM project. Because of price sensitivity, many software vendors are simply forced to state low or even no cost implementations and struggle to covey the value of partners otherwise they will lose the deal. Yet PIM projects need a suite of services wrapped around them to be successful.

Buyers should purchase PIM software and services with clear outcomes in mind, link it to a business case, and then do proper due diligence not just functionally. I guarantee you what you spend in the short term will then easily outweigh the potential total cost of ownership of a failed project or switch in 12 months time.