Unified pricing system

Published on by Joannes Vermorel.

We are pleased to announce that we are upgrading Lokad toward a new pricing for our Forecasting Services. The details have already been published, check it out.

Although your mileage may vary, simulations indicate that this change will represent, on average, a 20% saving for current customers. Our goal remains to stay far ahead of the competition, both in terms of forecasts accuracy but also in terms of TCO (Total Cost of Ownership).

Pricing has been simplified ...

It's simple enough to be expressed with a single compact formula $0.15 * forecasts 2/3 . And, yes, we still have the Power 2/3 coefficient. For those those who don't enjoy mental calculations of cubic roots, we do provide a calculator .

Wait! What do you call a forecast?  If you want sales forecasts for a single product for the next 3 months, one value for each month ahead, it counts as 3. If you repeat your forecasts twice during the same month, it counts as 6. If you do the same with 1000 products instead of a single one, it counts as 6,000 forecasts.

Then, the power 2/3 just acts as a large discount volumes:

  • 1k forecasts cost $15
  • 1M forecasts cost $1,5k (instead of $15k)
  • 1B forecasts cost $150k ( instead of $15M)

Bottom line, it's rather simple. Our inspiration was a mix of the Windows Azure pricing and the Twilio pricing.

In particular, it must be noted that there is no setup fee. Obviously, such a pricing is only made possible because Lokad is powered by cloud computing.

Then, if you happen to use or need Lokad, only once in a while, you wont be charged unless you actually use Lokad. If your account stay idle for 1 month, then you don't get charged at all!

Finally, there is no threshold effect our pricing (thanks to the power 2/3 approach). The more forecasts you need, the higher the costs, but the higher the volume discount too.

Our old pricing system, which had not been revised for almost 2 years, was suffering from one major issue: there were subtleties. Not major ones, still it was sufficient for people to routinely estimates their subscription costs to thousands of $ while it was only less than a hundred.

We are not going to make the same mistake twice. Our pricing page now includes dedicated simulators for inventory optimization and call center optimization. Any doubt about the new costs, just type in you number of SKUs or you number of calling queues.

... but it's still a variable pricing

Many analysts have been expressing concerns about variable pricing in software. How I can get my business plans in order if everything is changing all the time? you might ask.

In our humble opinion, and as far forecasting is concerned, we believe that variable pricing to solving way many more problems than it causes. You might wonder, what will happen if the subscription costs increases? If your Lokad subscription costs increases, it means that your company is growing and so are your forecasting needs.  The last thing you want while undergoing a steady growth is get your forecasts wrong, and let improper planning wreck havoc in your business. Then, our volume discount factor (power 2/3) ensures that the more you grow, the more volume discounts you get from Lokad.

But there is the other situation that analysts usually don't both bother to consider: what if my business is going down, what if we are downsizing, what if branches get sold?

With Lokad, your subscription will be going down accordingly. You will not be stuck with an over-sized on-premise solution to maintain. Pay-as-you-go guarantees that the software you buy today will not accelerate the demise of your business if the economy turns out to be really rough.

Categories: service status, subscriptions Tags: cloud computing forecasting on demand pay as you go pricing