Salesforce to Salesforce, the anti-viral network

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They are hungry for revenue...

Clearly the new service is very expensive. This is the first thing I commented on when I read about it:

http://smoothspan.wordpress.com/2007/12/05/saas-network-effects-start-charging-up/

SFDC seems to view this much more from a revenue opportunity standpoint than anything else. I think that's a mistake, but we've seen it before. Force is also extremely expensive for SaaS ISV's. On average, they can afford about 25% cost of service. SFDC's own number is even lower. Yet if you build the cost of Force into your offering and figure out that you must charge 4x that to have a competitive margin, it becomes clear it is a non-starter for a lot of businesses.

There's nothing new here: achieving a dominant position and then jacking up the prices is a tried and true feature of the Oracle culture that spawned SFDC. The only question is whether it is the right dynamic to maximize their success at this stage of the market and the company's evolution.

Cheers,

BW

Posted by: BobWarfield   Posted on: 12/07/07 You are currently: a Guest | Members login | Terms of Use

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