The DAM Software Price/Value Credibility Gap

Flexera Software and IDC released a survey last week that revealed an ongoing gap between the perception of value between vendors and enterprises:

The survey confirms a perception gap in the value of software that could explain some of the contentiousness between producers and their enterprise customers,” said Steve Schmidt, Vice President of Corporate Development at Flexera Software. “We’ve seen first-hand that the manner in which some software companies package, price and license their software products does not necessarily correspond with how organizations use or value them.” [Read More]

While it’s true that there will always be a disparity between what vendors think they should be charging and the price enterprises will pay (whatever industry you operate in) the DAM software market specifically has a problem with this area.  It’s less perception gap and more of a credibility gap in my opinion.  I am currently in process with a number of different DAM vendor evaluation tasks and there is an astounding disparity between what different vendors want without any real correlation between price and value from one option to the other.  Even if one limits the comparisons to a single distribution model (e.g. SaaS or on-premise) there are still big differences and averaging the capital and maintenance costs over a period like three years does not bring anyone back into alignment either.

There seems to be some relationship between vendor size and costs (as one would expect) but even if we sub-divide them into groups based on turnover, the differences are stark. My clients are justifiably concerned about picking the wrong product and one option being considered is to either defer the whole purchase or request more detail from those involved to explain their pricing.  This is not a good outcome for anyone in our industry and my expectation is that it is being repeated elsewhere too.

My suspicion is that DAM systems have grown too large and monolithic for DAM vendors to be able to accurately price their offerings properly any longer.  Each of the different development activities (combined with all the other associated costs for marketing, administration etc) must now be highly complex to calculate properly and I believe there is a lot of ‘finger in the air’ pricing taking place which is contributory to these negative value perception effects.

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