Today, I’m excited to announce our biggest transformations to date – for both the OnTime product and Axosoft as a company. This transformation is bigger than just a new product announcement or a new pricing strategy. It’s also a fundamental change in how we will do business in the future. We’re changing a lot of things and I want to go through the process and the reasoning behind why we are making these changes.
It’s hard to believe that 2012 marks the 10-year anniversary of Axosoft and OnTime. A lot has changed since 2002 when I first started developing OnTime. Desktop applications were still predominant. Google wasn’t even synonymous with search yet (remember AltaVista?). Gmail and Google Apps didn’t exist. Neither did iPhones and iPads. There were some rumblings about social networks like Friendster, but Facebook wasn’t even a neurotransmission in Mark Zuckerberg’s big brain.
Axosoft has changed, too. We’ve grown from a one-man shop (me) to just shy of 30 people, and we’ve done it profitably and organically without any outside funding. We’ve gone from my little home office to a roomy 12,000-sq-ft facility in sunny Scottsdale, Arizona. It features a gym, showers and a game room / lounge (you should join us, we’re hiring).
Some of the changes we’ve experienced over the past decade have been related to the technologies we use to run Axosoft. Looking back, we have seen the following transitions within Axosoft:
- We switched from Microsoft Exchange and Outlook to Google Mail and Calendar
- We use Microsoft Word & Excel less and less and started creating and sharing documents and spreadsheets with Google Docs
- We started replacing Dell Notebooks and Desktops with MacBooks and iMacs.
- We abolished Internet Explorer in favor of Mozilla Firefox, Google Chrome, and Apple Safari.
- We hung up on our Blackberry and Windows Mobile smartphones and began answering our iPhones
- We traded Microsoft Windows’ hour glass for Apple OS X’s spinning beach ball
- We used fewer desktop apps and more cloud apps.
The changes in the products that we depend on to run Axosoft, got a few of us thinking about the whys and hows of these product transitions. Why were we changing products that were already working for us? and most importantly:
How do new products win in a market that is already dominated by established and well-funded players?
Since we are a software company that is often going up against established and well-funded players (even Microsoft is one of our competitors), we thought it would be important to answer that question. We started examining the products we had been switching to and they all appeared to have the following things in common:
- Feature Rich – Although the new products didn’t necessarily have the same features as the products we were switching from, they never lacked the must-have functional requirements and often had killer new features of their own that we never had before.
- Easy to Use - All the new products that we had switched to were significantly easier to use than what they replaced. That meant we had much lower ramp-up curves to learn how to use the new product and less reading of documentation.
- Fast - All the new products we were using were faster than what they replaced. We could accomplish the same tasks in much shorter times.
- Cheap – In all cases, the new solutions we were using were similarly priced or cheaper than what they replaced. Now, before you say, “What about the Apple tax? Aren’t Macs more expensive than Dells?” The answer is actually no. Here is an article I wrote on the subject several years ago.
The Sweet Spot
So, if we were to visualize their commonalities…it would look something like this:
Virtually all the products we were switching to landed right in the “Sweet Spot” of the diagram. Surprisingly, even in very mature markets, there is still a black hole (as far as products go) in the sweet spot. Well, this is where we want to be in everything we do at Axosoft moving forward.
So we asked the question “how does OnTime V10 (that was the current version of OnTime back then) measure up against this diagram?”
We realized we had become the Microsoft of project management software for developers in the following ways:
We had an extremely feature rich app that was not exceptionally fast or easy. We could argue that we were pretty cheap at $19 per user per month or a 10-user edition of our product for $29/month. But with Express, Pro and Enterprise versions of our software, the price could go up to $37 per user per month. Our pricing was both confusing and not exceptionally cheap. On our diagram, here is where OnTime belonged back in 2010.
So starting 2 years ago, we set out to change that. After an 18-month rewrite of our OnTime Web product, with a focus on fast and easy, we released OnTime V11 in July of 2011. And we can truly say that OnTime 11 is now a category-leading product for ease of use and speed. As a result, OnTime 11 has been our most successful SaaS offering to date. That was a promising start, but we hadn’t touched pricing. In fact, all the conventional wisdom on pricing is that “you can increase your price, but you can’t reduce your price in the software business.” Every software CEO I spoke with advised us not to reduce price. It’s also risky to reduce price because a reduction in price guarantees that you will lower revenues if you don’t substantially increase volume.
With the release of OnTime 11, we had done well and turning back to our diagram, we had made great progress:
But we still weren’t in the sweet spot, which brought us to pricing. In all fairness, though, OnTime was priced competitively when compared against most solutions in our space. Plus, OnTime has traditionally included 3 products in 1: Scrum with bug tracking, Help Desk with a Customer Portal and a Team Wiki. But…while Axosoft and OnTime have enjoyed tremendous success, Atlassian’s JIRA has shown that having a feature-rich product that is also cheap, can be an extremely powerful force in a market that’s missing a sweet-spot product.
So we decided to start working on making OnTime’s pricing exceptional. Starting today, we will offer OnTime Now (the Hosted/SaaS version of OnTime) as 3 separate products:
- OnTime Scrum (includes bug tracking)
- OnTime Help Desk (includes a web-based customer portal)
- OnTime Team Wiki (perfect for dev team collaboration)
To make pricing exceptionally attractive and simple, our new pricing is:
$7 per user per month for each product
For teams of 10 users (or fewer) it’s just $10 per month for the entire team
To give you an idea of how this compares to our old pricing, OnTime has traditionally been priced at $19 per user per month (for Pro) and $37 per user (for Enterprise). Since most of our customers are mainly interested in OnTime for Scrum project management and bug tracking, a team of 20 was paying up to $740 per month. Today, that same team can pay as little as just $140 per month. That’s an example of up to an 81% price reduction!
OnTime OnPremises (Installed)
These changes will not affect the OnTime OnPremises (customer installed version of OnTime). OnTime OnPremises will continue to be sold as a Pro edition and an Enterprise edition for the same pricing as before. Installed applications are more complex to sell and support which is why these pricing modifications are not being applied to our installed offering.
Our New Pricing vs. Competitors
Prior to today, the low-priced leader in the industry was Atlassian’s JIRA. There were no other “feature rich” products designed for software developers that were cheaper than JIRA. Products like BaseCamp, Trello and Asana, while they are wonderful products, don’t fall into this category because they are general purpose tools that are not feature-rich for scrum or agile software development teams. For example, none of them fully offer custom fields, custom workflows, the ability to determine which fields show up on add/edit forms, automated burndown charts, and a slew of other features that are required by Scrum and Agile teams. That’s why I’m not including those products for consideration in this article.
So this is how we compare to other feature-rich Scrum and agile tools:
With this pricing change, OnTime is now the lowest priced Scrum project management tool on the market for most teams, sometimes by an order of magnitude. So now for a similar price to Atlassian’s JIRA, dev teams can obtain a cohesive, enterprise-class Scrum product that is feature rich, easy to use and exceptionally fast.
We think we’ve nailed the Sweet Spot with OnTime V12.
Honda Civic vs. Mercedes Benz
We suspect that some of our over-priced competitors will look at our new pricing and make the comment, “you get what you pay for,” or “you can’t expect to pay the same for a luxurious Mercedes Benz as you would for a Honda Civic.” While those traditional sentiments and analogies may generally hold true for physical goods, they don’t apply to software.
With physical goods, the old adage, “you get what you pay for” is generally true, but it doesn’t necessarily apply to software. With software, each user gets a product that’s worth what the entire group of users has collectively paid for.
It’s worth examining what that means. Since the cost of a new user is exceptionally low for software vendors, price is simply a function of volume. If a software product that costs $50 million to develop attracts 100 million users, it will generate fantastic profits even if it’s priced at just $1 per user (for simplicity’s sake, I’m ignoring the cost of supporting each user). That same product would lose millions of dollars at a price of $1,000 per user, if it only attracted a few thousand users at that price point. In contrast, if Mercedes Benz could sell 100 million cars tomorrow for $10,000 each, they would lose a fantastic amount of money. Despite the $1 trillion in revenues these sales would generate, the cost of producing 100 million Mercedes Benz sedans will far exceed $1 trillion in materials alone.
So, in the software industry sometimes it is possible for the Mercedes Benz of software to have a Honda price tag! It might even have a skateboard price tag! ”You get what you pay for” doesn’t apply. Another way to put this is that it’s impossible to tell which software product is the Mercedes Benz of its class based on price alone. You’re better off giving it a test drive and deciding for yourself.
New Web Sites Too
With the launch of OnTime V12, the new products, and the amazing new pricing, we also decided to really jazz up our web site. We went back to the drawing board and started the web site from scratch. We decided that Axosoft.com should be all about the company, careers, our blog and an overview of our product offerings. We want each individual product line to get its own super-focused web site. So, all the information about OnTime is provided on the OnTimeNow.com site. OnTimeNow.com provides more information and screenshots than ever before and getting started with OnTime has never been easier than with the all new Getting Started Page.
Here’s to the Next 10 Years
The last 10 years have been an incredible ride. I’ve had the privilege of working with some of the smartest people in the industry, doing some really cool things together.
We hope you like all the changes and our commitment to passionately pursue the sweet spot in everything that we do from here on. Please, don’t hesitate to tell us what you think in the comments. Here’s to the next 10 years…
Founder & CEO