Today I got a call from a new trial user requesting an enhancement to the system. During the course of that call he told me that another firm was trying to woo him away from InnFirst. However, they used a pricing model which charged a percentage of every reservation that was transacted using their system. This did not sit well with the customer due to the cost.
While I understand the benefits to the technology company of such a revenue model, I don’t see any benefits to the actual customer. For my own vacation rentals I’ve worked hard over the past 10 years to build up a huge network of repeat and word of mouth business. My website is robust and I understand how to effectively market my rentals. WHY IN HELL WOULD I PAY A COMPANY 1.5% – 3% OF EVERY RENTAL TO USE THEIR SOFTWARE? Maybe I’d pay them .5% for every new rental they could verify they brought me, but I’d pay them nothing for existing rentals.
Assuming $250,000 a year in sales I would be paying them at a minimum $4000 a year to use a simple vacation rental management platform? I think over the long term companies like LiveRez and Escapia and any other product that prices as a percentage of revenue will ultimately face too much competition from companies like InnFirst.com which price at a reasonable level according to the number of rooms or properties under management.
True, they can make the short term argument that they offer more features than what InnFirst.com currently offers, but that gap only exists in the short term. We are putting out new functionality on a weekly basis based upon the input and requests of our rapidly growing customer base. It’s not rocket science to put out an on-demand vacation rental CMS, or offer enhanced distribution methods or offer additional search / sort / booking options…it’s just not rocket science. It just takes time and money and a great understanding of the market.
I am quite confidant that someday when a VR Manager takes a look at the InnFirst.com platform and compares our pricing to that of LiveRex or others, versus our features, and realizes “wow I can save $xx,000 a year or more by switching to InnFirst.com and have similar functionality?” It’s a no brainer. I’ve got to laugh at these companies with their big payrolls, sales staffs, etc.. I just don’t think they understand the true metrics of SaaS and how to build a long term, sustainable business model on the Internet today.
Take notes my friends, I’ll show you the way.
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