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DTO Vendor Tools Questions regarding our Vendor Tools product.

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Old 03-15-2009, 12:23 PM
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Default DTO Vendor Tools pricing

In developing vBulletin communities and working with other site owners I know there are different needs for each site. With that in mind we offer flexible pricing options for all of our products. Whether you prefer to pay up front, lease licenses, or have other needs we can work with you to find something that will not only help you get started but help us continue growing our team, offering continuous product support, and building more great products.

Take a look at our current vBulletin products, pricing, and contact us to get started!

Sincerely,

Mark Ferguson
President - Drive Thru Online, Inc.

Edit: Please note that since this post was originally made we have changed the pricing structure for DTO Vendor Tools to be a lower upfront cost with annual renewals for continued updates and support. This change was a result of speaking with other customers, potential customers, and members posting below. All this feedback was taken and resulted in a new structure that hopefully meets the site owner's need as well as provides the best opportunity for DTO to grow and bring more products to market.

Pricing for DTO Vendor Tools is as follows:

$195.00 per site for the first year
$99.00 renewal for updates and support
per site per year (after year one)

Options:
$175.00 branding free option
$25.00 installation service

Last edited by Mark; 08-28-2009 at 10:41 AM. Reason: Pricing update
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Old 08-22-2009, 12:11 PM
MGSteve MGSteve is offline
 
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Have to say, I prefer to pay upfront. The idea of paying you $85 a month for a package is, frankly, scary. I appreciate you've probably looked at it and thought - well, its only $8.50 per vendor, think of the money you'll make from the vendors advertising with you....

Whilst that is true, I don't see why I should pay you $1020 a year for the privilege! You've way overpriced yourselves when there are other packages around that, OK don't perhaps look as nice, but are cheaper, some even free.

Just my 2c... If it was $85 a year, then I'd be interested, or perhaps $295 upfront.

Put it in perspective - Jelsoft only charge, what $90 a year or something for VB?

Lastly - is it worth 1020 a year and that's for only up to 10 vendors! I can't beleve you seriously expect people to pay $3000 a year if they've got a network of 50 vendors on their site....

I can see it from your point of view, why you would want to charge a monthly / annual fee - my point is that you've totally pitched it wrong.

As I said above, if it was an annual fee of MAX $150, I'd sign up now. As it is, no thanks - as Superb as it may be. Your software should provide the tools to make me money off the site, not simply hand $245 over to you each month, who gives you the right to think that you should be rewarded for my success!

Either review the pricing or get rid of the vendor limits for $85 a month... Or change it to $25 per month up to 20 vendors, $50 up to 50 vendors, anything over that is $85pm.

I doubt there are 20 vendors in my market segment for my site, let alone 50!

Don't get me wrong, I'm not knocking your work or the product - its simply not priced right in my opinion. I can see why you've priced it the way you have, the problem is that I feel ripped off by the pricing.

Not to mention the fact its on a per site basis... I have a couple of sites I'd like to use it on, but I sell advertising across the network, so I'd be paying you twice but only being paid once for the advertising - if you get me. Plus one is a lot bigger than the other site, so it would end up costing me money at $85 a month instead of making me money...

Last edited by MGSteve; 08-22-2009 at 12:23 PM.
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Old 08-23-2009, 04:56 PM
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Quote:
Originally Posted by MGSteve View Post
Have to say, I prefer to pay upfront. The idea of paying you $85 a month for a package is, frankly, scary. I appreciate you've probably looked at it and thought - well, its only $8.50 per vendor, think of the money you'll make from the vendors advertising with you....
As I alluded to in another email there are several factors that go into the pricing of all of our products:
  • how will it be used?
  • will it be used to drive memberships or will it be used to generate revenue?
  • what pricing will the customer tolerate versus the benefit they will receive?
  • what pricing is necessary to support dedicated development, support, and documentation to deliver a professional level of service?
  • etc.
There are a lot of factors. Also in the case of Vendor Tools, when I began developing it, there were minimal features in vBulletin to facilitate income generation from a community. The only real options were integrating some type of advertising model for banners and paid memberships. I proceeded first with adding banner ads to one of my sites. What I quickly learned was that:

  • vendors were happy to be on the site
  • vendors didn't understand the notion of impressions and click throughs and often questioned why their numbers were low
  • vendors didn't have time to spend on the site every day and would often miss critical support-related threads, unhappy customers, new sales opportunities
  • vendors really need to build rapport with members before members will purchase from them
  • once a rapport is established the vendor, even with higher prices, members would buy from them over a vendor that they did not know well but had lower prices
  • to really succeed in a community vendors need other tools, benefits, and services to get a return on their advertising investment
  • banner advertising is mere reinforcement of a vendor's presence on the site and can't be the only thing focused on
  • if you are successful in attracting vendors it creates a lot of work for the admin and therefore needs to be as automated/self-service as possible
Vendor Tools was developed out of the above. It doesn't focus on banner advertising. It focuses on delivering a set of tools for the admin, vendors, their representatives, and providing a useful interface for site members. This combined with rate cards, packages of features for advertisers helped me quickly grow from 15 vendors to 80 when I sold my site and turned to focus on working on the software side of things. I had built my site from a passion and I turned it into a full-time job supporting my family.

With this focus and my experience with a host of unsupported, undocumented, and abandoned plugins that I experienced I wanted to provide a solution that delivers not only software but prompt support, fully documented products, professional development processes, regular product upgrades, and sharing our experience, best practices, collateral, etc. with those that are serious about building a solid business around a passion that they enjoy. In other words software is just one thing you receive in working with us. We want to provide our customers with everything they need to be wildly successful.


Quote:
Originally Posted by MGSteve
Either review the pricing or get rid of the vendor limits for $85 a month... Or change it to $25 per month up to 20 vendors, $50 up to 50 vendors, anything over that is $85pm.
We are flexible in how we work with our customers. That said there are only so many ways I can list pricing options on a site without creating lots of confusion ;) Regardless our goal is to get a communication channel open with interested customers and we can develop a pricing structure that works well for the customer and enables us to continue developing products. For example, we could easily start you out at a reduced rate for Vendor Tools for the first three months then ramp your rate as you get familiar with the product and start leveraging it to support your current vendors as well as adding additional vendors. Again, our goal is to help you be successful and in doing so strengthen our business so that we can continue to develop our existing products as well as develop new ones.

Quote:
Originally Posted by MGSteve
I doubt there are 20 vendors in my market segment for my site, let alone 50!
I would respectfully disagree with you. In my experience with the automotive space there are parts suppliers (tires, wheels, etc.), replacement parts providers, service provides (local shops that could be support in a regional area of a community), performance parts suppliers, and dealerships. In fact we have a product to allow dealerships to integrate and manage their inventories within a vBulletin site. Its not something we have released yet but the opportunity to gather a large number of paying vendors from a wide range of areas is VERY doable. Even in the site that I owned I would have never thought that there would be more than a handful of vendors but it turned out that by consistently working to improve the site for both members and vendors they found the site and wanted to join as a paying advertiser. In the six years I ran the site I never had to go and look for advertisers. They always found us first and having a suite of services to help them be successful on the site was what compelled to join. Of the first 10 vendors I signed in 2002 at least 8 of them were still advertising on the site when it was sold at the beginning of 2008. I attribute this long-term relationship by providing them with the tools and services that helped them to realize a meaningful return on their advertising investment.

I hope the above provides a little insight into our thinking and I hope that we'll have opportunity to work with you.

Sincerely,

Mark
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Mark Ferguson
President - Drive Thru Online, Inc.
Drive Thru Online Helping Turn Your Passion into Profit
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Old 08-24-2009, 03:49 AM
MGSteve MGSteve is offline
 
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Hi Mark,

I have no doubt that Vendor Tools is superb, it certainly ticks all the boxes I want and yes, I'd much rather pay for software than use a free version that is reliant on someone's free time for bug fixes and new releases. Its the pricing structure however that simply dumbfounds me.

I don't know of any other software producer who prices their product along the lines of 'we want a share of the income we're helping you generate'. If the service was hosted on your server, then I could understand the approach, although the prices are still ridiculous, paying $1032 a year at the bottom end and $7,740 a year at the top end. The webmaster is still doing the hard work of getting sponsors signed up and interested in taking part, all you're doing is providing the added value to the deal and making the selling a bit easier. You still need to persuade them to part with their money though!

Think about what you're asking people to pay for. They're paying for a software package, not a service. I know that you say that you add services into it, but none of them are worth $7,740 a year.

If that was the case, vBulletin would be charged per user, as after-all, without that you'd have no community to monetize! Imagine the outcry if VB changed pricing structure to one like yours, after all the more paying members you have, the more money you make. Its no different to what you're asking for.

At the end of the day, I doubt you'll find anyone who will agree to pay those rates. If it was changed something like $35 a month at the lowest rate, that would be more likely to get people's interest.

Effectively what you're asking for is a profit share of the incoming your package produces. Just what gives you the right to do this? Just because you wrote the software doesn't give you the right to take part of the income it generates! I doubt there is any other software package priced the way you've done it here.

At the end of the day, it would be more cost efficient to develop a solution myself than pay you $7,740 a year for it! Hell, even at the lower end of $1030 I could take one of the sponsors mods off vbulletin.org and modify that to work along the same lines as what you've done. OK, it wouldn't be as polished or get the updates, but it would be free!

With respect, I don't know what you did as a main job before you started your website before you sold it, but I've been running my own business, managing my forum and developing websites since 2002. I simply fail to see the business logic for this pricing. I can see why you'd want to charge it, the idea of a lovely steady and big income each month would be attractive to me too. However, from the other side of the fence, its not attractive at all and simply smacks of greed. (Sorry, but I'm just being honest). See it from our view - what do you do for $7000 a year!?

I don't need you to install it or update an existing version for me - I'm quite capable of that myself, as a lot of other webmasters are. However, some won't be, which is where you can earn a few extra bucks for installing updates.

Please, don't take any of this personally, as I said in the PM, you won't get anyone more interested in this that me, its perfect for what I want, but the price is simply too hard to swallow. Perhaps its just me being tight, but at the end of the day, I'm in business and when evaluating purchases I evaluate the benefits vs cost. Yes the benefits are numerous with Vendor Tools and I can see you've put a lot of time and effort into producing it, but the benefits are simply not worth the cost.

I've done a bit of excel work on this and attached two PDFs showing the results. Basically I entered the costs for the product for up to 101 vendors. Also I charted the Cost of the license vs the income generated and the cost per vendor.

Now, I charge 20 per month for traders to advertise on my forum. This is without a banner, with a banner its 50, so assuming you can enable sponsors with or without banners, there will be two tiers. For now I'll assume most of them will be 20pm, which bears out my experience, few go for the 50 a month as they feel its too expensive. No matter how much you tell them the benefits (heh, sounds familiar! ;))

With the pricing you're suggesting, with 10 vendors you would be taking 25% of my income! With 11 that jumps to 40%, but of course comes down up to 25 when it jumps up again. This can't really be avoided though due to the jump up to the next band. Although going from into the next band, you have to get 6 more vendors on board before the %age comes back down to the same level it was at 9.

This is what I suggest.

A buy it now, or leased approach.

The basic buy it now would be for up to 10 sponsors and cost $399, addition license packs come in 10s and cost $49. So if you had 35 sponsors you wanted to add, it would cost $399 + $147. Free upgrades for a year, after that you have to renew a support license (say $199). So total annual cost would be $199 once you've been with you a year.

Leased would be as follows: (a month)

1 to 10 vendors - $35
11 to 25 vendors - $55
26 to 50 vendors - $75
51+ vendors - $100

So, the same 35 sponsor buyer would have the choice of $546 to buy it and then $199 after year two or pay $75 a month, which would result in $900 a year.

That way you'll get a good mixture of those who can only afford a monthly charge will pay monthly, those who can afford a lump sum can pay that. In a way its good for you too as you get a mixture of lump sums and regular monthly incomes.

Another idea would be to only allow monthly people to convert to a paid plan after 12 months and then give them a 10% discount or something.

Going back to that 35 sponsor, if they used your current pricing they'd be paying $245 a month, or $2940 a year. $900 a year under the revised plan is a lot, but its a lot more attractive than $2940. At the moment, if I was that 35 sponsor client, you'd be taking 25% of the income I took from the sponsors. Hell, I don't even pay that much in tax!

Ok, you on the face of it won't earn as much, but in reality you'll almost certainly get more people buying the package than you would at the current prices.

Apologies if it sounds like I'm telling you how to run your business, but this is how I would do it and thus what I'd be prepared to pay as a customer.

At the end of the day, what's better: one client paying $245 a month for 35 vendors or five clients paying $75 a month.... $375 a month for doing basically nothing apart from answering a few emails and replying to forum posts (ok, I exaggerate a bit, but you get my point) is pretty good going. Then charge extra for the bits that people want, i.e. installations, premium support, customisation etc..

The problem is that you're competing with free solutions. Yes, they may not be as complete and lack the backup that yours does, but its still free vs expensive - imo, people have to be desperate to have yours to pay the current prices.

As I said, I hope you don't take this personally. But you did ask for feedback ;)
Attached Files
File Type: pdf VendorTools_Current.pdf (86.6 KB, 3 views)
File Type: pdf VendorTools_Modified.pdf (89.1 KB, 4 views)

Last edited by MGSteve; 08-24-2009 at 03:59 AM.
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Old 08-24-2009, 04:23 AM
MGSteve MGSteve is offline
 
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I'll just reply to a few points you made in your post (forgot to do this above). Mind you it took me 2 hours to post that reply & do all the excel work!

Quote:
Originally Posted by Mark View Post
will it be used to drive memberships or will it be used to generate revenue
As I said above, why does that matter to you? You're assuming that if it generates revenue you can charge more for it. Any product pricing should be on what benefits it brings to the client, NOT whether they earn from it and thus you can up the rates because of that.

Quote:
if you are successful in attracting vendors it creates a lot of work for the admin and therefore needs to be as automated/self-service as possible Vendor Tools was developed out of the above. It doesn't focus on banner advertising. It focuses on delivering a set of tools for the admin, vendors, their representatives, and providing a useful interface for site members.
I don't disagree, there's still a lot of work involved in getting traders on board though...


Quote:
With this focus and my experience with a host of unsupported, undocumented, and abandoned plugins that I experienced I wanted to provide a solution that delivers not only software but prompt support, fully documented products, professional development processes, regular product upgrades, and sharing our experience, best practices, collateral, etc. with those that are serious about building a solid business around a passion that they enjoy. In other words software is just one thing you receive in working with us. We want to provide our customers with everything they need to be wildly successful.
I agree, you do offer more, but you have to remember that not all clients have the same needs, you can't adopt a one-price-fits-all pricing strategy. Fully documented products is good, but only if you're going to customise it! Then you loose out or get problems when it comes to upgrading. Then you end up paying for upgrades you can't use, or can use but you have to do the customisations all over again.

Quote:
Regardless our goal is to get a communication channel open with interested customers and we can develop a pricing structure that works well for the customer and enables us to continue developing products. For example, we could easily start you out at a reduced rate for Vendor Tools for the first three months then ramp your rate as you get familiar with the product and start leveraging it to support your current vendors as well as adding additional vendors. Again, our goal is to help you be successful and in doing so strengthen our business so that we can continue to develop our existing products as well as develop new ones.
I do understand your point about confusing price structures and I agree, it is hard to come up with an easy to understand system. However, you point about starting communication with potiential clients.. I wonder how many people have read the VT page on your website and thought - yeah, that sounds good. Then saw the pricing and laughed and closed the page. My own experience was along the lines of..

'Yeah, this looks great, right where's the pricing info?'
'Ah, ok - clubs is nice and cheap, that's good.'
'Garage plus isn't bad either'
'Showcase - hmm, $395 is a bit pricey' (upon discussions I've had since with you though, its probably about right)
'Vendor Tools, ah here we go'.
'WTF! Oh my god, they're having a laugh.' *whips out the calculator*, 'that's $1000 a year for up to 10 sponsors!'.
'hmm, I see the product hasn't been out for long, I'll have a nosey around on the forums and see what people are saying about it'.
'ah, not much. I'll start a thread about it as it is a superb product, but I can't believe anyone pays that!'

Quote:
I would respectfully disagree with you. (about number of vendors)
The problem we have is that MG and Rover are two defunct brands now. There never were very many specialist tuners (still aren't really). The US is different, there are loads of specialist garages around the place (although not for MG/Rover!) as the country is so massive. Here we've got a handful and many of them don't need to advertise as they get recommended on the forums anyway due to the limited numbers in their marketplace. Other brands may have different situations, Ford for example probably have more related specialists around. You may get a few general motoring sponsors (i.e. tyres / tools) but they're in a way harder to get on-board because of the vast numbers of automotive forums out there). They can't afford to advertise with them all and even if they do advertise on a lot of them, they can't spend the time replying to posts as they'd get no work done!

The obvious come back will be that VT will make your forum standout when it comes to advertising and yes to a degree it will, I don't disagree. The problem still comes down to getting them to pay though...

Quote:
I hope the above provides a little insight into our thinking and I hope that we'll have opportunity to work with you.
Took the words right out of my mouth! Perhaps it is just a difference in viewpoints here, you know from your experience what you've found in the US, I know from my experience what I've found in the UK. Two different markets, but you're trying to sell your product to both. But even in the US, if I had 30 or 40 vendors, the price you ask it still, in my opinion too high.
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Old 08-24-2009, 05:40 AM
roberth roberth is offline
 
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I just read this post and I have to agree with MGSteve.

I run a swedish MINI Cooper forum and when I saw the DTO vendor software and watched the demo was very excited. Would fit very nicely with my forum. Then I saw the pricing, WAY to expensive for our forum. Currently we have 10 sponsors giving various discounts, but we dont charge them anything for that as we are just to small for that. If we were to charge a monthly fee from them alot of them would leave, some would stay because its a very nice product you offer. Sweden with a population of 9million and a forum specializing in New Mini Coopers(02->) you could imagine that we have many vendors to squeeze for money.

So for me unless we can make up some special deal for my case this is as I said in the beginning, way to expensive for us.

But I most say again, this looks to be a VERY nice product and I would love to be able to use it to help gather more sponsors. But it would have to be a one time price to buy it and not priced to high for us to be able to consider it.

But a little less money is better than nothing I would guess ;).
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Old 08-24-2009, 05:44 AM
MGSteve MGSteve is offline
 
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That's a good point actually, a few of our sponsors actually advertise for free in exchange for discounts offered to paying members, so again, we'd be loosing money on these deals...

You need a reasonably large forum before you can start to charge for sponsors, we're around 65,000 members strong, 2 million page views a month and its hard work getting sponsors onboard. Its a lot easier now compared to when we were under 10,000 members. As far as they're concerned, they're helping you gain paid memberships by offering discounts to those members and then you want them to pay for advertising ontop of that. (That's how they see it), its hard to argue with them. Although once you prove that they're gaining sales because of it, its a bit easier to persuade them to pay.

But ours is rather big, imagine what its like for smaller forums who struggle to get paying sponsors. You've priced it up where by only really large forums could begin to even afford it.

Last edited by MGSteve; 08-24-2009 at 06:00 AM.
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Old 08-24-2009, 03:25 PM
roberth roberth is offline
 
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To put in contrast to MGSteve's forum we currently have about 1000 users registered on the site, with about 100 of these that are paying members(16EUR a year). If you look at these numbers you can see that the pricing is a little out of our league ;).
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Old 08-24-2009, 03:49 PM
MGSteve MGSteve is offline
 
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Yup, quite a few forums use sponsors who offer deals to the paid memberships to entice people to join the site. Its not just you Robert, they've priced it out of everyone's league..

Then imagine this. Imagine if that 35 sponsor forum owner I suggest above comes along, he's already got 35 sponsors on board and likes the look of the package. But why should he pay $245 a month to DTO for effectively nothing? They haven't helped get those sponsors on board, he's retaining them well anyway so its simply a value added service. With DTO using the 'profit share' mentality, in his position I'd tell them to get stuffed. I worked hard to get those 35 onboard, why should they get a slice of that money?

This is why pricing according to whether it will earn the client money or not isn't a professional way to price anything up.... You price to what the market will stand and the benefit to the client, not based upon the amount of money it could earn for the client.
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Old 08-24-2009, 03:58 PM
roberth roberth is offline
 
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I think(hope) they get our point of view... lets hope we can see some changes to this.
But great job with the product, like I said before... looks very nice.
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