Lokad news - Integrated business forecasting

One year ago, when we initially designed Lokad, we have been considering many potential features

• more powerful data model than time-series.
• more features in the web application (we decided to have less).
• more indicators beside forecasts (confidence interval, estimated errors, ...)

Each time so far, we decided to do less as opposed to do more, the reason was that we did choose simplicity over flexibility (and Lokad isn't the only company doing this). The main issue with traditional statistical software is that you end up with a list of models so long that only a statistician can comprehend and use.

Simplicity often means faster and cheaper. What can be the benefits of forecasting if the process is too complicated and too time consuming to be used anyway? Lokad focuses on removing all technical obstacles that would prevent even small companies to start using forecasting.

Ohloh is a nice social network completely focused on open source software. Basically, it can extract all sort of information directly through source control extraction and analysis.

Based on the Ohloh estimates, developing the Lokad products should have cost us $1,766,626 assuming $55,000 per year per developer. To be honest, we did spend that much. :-) We are obviously a bit more productive that what Ohloh is expecting.

Do not hesitate to grant Lokad a few Ohloh stacks. We need your support to expand the coverage of our open-source contributions.

In a previous post, I was explaining the Lokad pricing formula. We did get feedback on that one, and there was a consensus: it was not possible to understand the Lokad pricing at first sight. Thus, we have decided to significantly improve the pricing page to make it much more visual.

 On the left, I have put a miniature of the new pricing table for Lokad. Special thanks to Matthias for the inspiration. The table is provided a convenient way to vizualize the Lokad pricing, the subscription plans are staying unchanged.

Lokad delivers forecasts and we charge by the forecasting task. Simply put, the more forecasting tasks you have and the more you pay, but with a quantity discount. This post is a small attempt to explain a bit the mysterious rationale behind the Lokad pricing formula.

The power 2/3 formula 

Yet, if you have  10x more forecasting tasks, you do not pay 10x more with Lokad because we provide bulk "implicit" discount in our pricing formula. Indeed, the price formula is (number of tasks)^2/3 .Although the power 2/3 might look complicated, the effect is quite simple:

If number of tasks is x8 ==> total price is x4 

 As other way to express this formula is to say (it's completely equivalent)

 If number of tasks is x8 ==> price per-forecasting task is 1/2.

Thus, if you are using 80 tasks, you are charged only 4 times more than if you were using only 10 tasks, although you are consuming 8x more tasks. If you are not comfortable by multiplying the number of tasks by 8, then you can also consider that this formula is equivalent to a 25% discount (roughly) if you take two times more forecasts. The discounts pile up. So if you multiply the number of tasks by 64 = 8x8, then the per-forecasting task price gets divided by 4. 

The reasons for the quantity discounts

Most software companies provide bulk discounts, but few of them would actually explain why. They are many different reasons for adopting such a pricing scheme. A common reason is that the marketing costs are lower if you sell 1000 licenses at once as opposed to sell 1000 licenses to 1000 customers. This reason somehow apply to Lokad but it's only a small part of the explanation. The key factor when defining the price of a software is to figure out the benefit that the customer gets from using the software.

How much benefits do our customers get from a marginal forecasting task? Let's consider the situation of a small retailer selling 1000 products. The first 50 products are top selling products, thus the retailer needs accurate sales forecasting for those products because those top selling products represent a really big percentage of the business. Then, the next 100 products involve moderate sales. It's still interesting for the retailer to get forecasts but the benefits are lower because those products represent a smaller part of the business. Then comes the remaining 850 low profile products. The sales of those products are not really worth to be forecasted because those products represent only a small percentage of the business anyway.

From the Lokad viewpoint, it's clear that Lokad cannot charge the same price for the sales forecasts of the 50 top selling products (that are really useful for the retailer) as opposed to the sales forecasts of the 850 low profile products (that are much less useful to the retailer due to the limited business impact). Thus, Lokad must charge less per-forecasting tasks as the number of forecasting tasks increase, because the per-forecasting task benefit of the customer is decreasing too.

As you may have noticed, we have started to translate Lokad both in French and in German. Only a couple of pages have been translated so far in both languages. We are planning to increase the amount of "localized" content over time.

 The localized content is reachable through the flag on the upper right corner of the Lokad pages. If you feel that Lokad should definitively be translated in your language do not hesitate to contact us.

 The Forecasting for Business forums also include localized forums

• French
• German

The "old" Lokad website had been designed by a few programmers at Lokad. The website was clean but not too appealing to my taste. Thus, we have hired recently hired Sergey Pozhilov, an excellent designer, who did manage to improve significantly the look & feel of the website.

At this point, we have just finished finished to migrate the "old" website into the new skin.

Also, the content of community.lokad.com has been migrated toward www.lokad.com; it did not make much sense to isolate the add-ons in a separate website. We hope the new architechture to be much more straighforward for our visitors.

Sourceforge.net has started a community awards competition. Lokad has released many open source add-ons already. If you want even more open source goodies to be released, do not hesitate to support our open source project on SF.NET, you can vote for the Enterprise category.

The Lokad forecasting technology can be integrated into any 3rd party applications through our Web Services. We have just been featured  ProgrammableWeb along with 400 other major WS API available for custom application development. The Lokad Web Services are also listed on eSigma directory.

 Although the adoption rate of the Web Services has been slow (400 API providers is notmuch for a technology that was already available in 2001), Web Services are now recognized industry standard, gaining a large momentum since 2006. Below, the growing curse by ProgrammableWeb for the number of mashups relying on public Web Services.

We have recently updated our product page (the previous one was just plain ugly). Aymeric has designed a series of icons to better differentiate the Lokad products. All icons are variations on the original logo for this blog

Mediachase provides a leading eCommerce Framework targeting .NET. We are very proud to announce that Lokad is now one of the few featured 3rd party solutions for the Mediachase eCommerce Framework (eCF).

 Currently, Lokad has released two products that provides sales forecasting integration within Mediachase eCF

• Lokad Desktop Sales Forecasting, a regular windows application.
  
• Lokad ASP.Net Sales Forecasting, a ASP.NET component to be integrated directly within the eCF application.