Pink Software has announced it will hold the price of its TurboCASH/Lotus SmartSuite Bundle at a retail price of R999.
Philip Copeman, MD of Pink Software, explained the move" "The recent slump in the rand has caused the price of our competitors` products to rise dramatically. It costs over R9 000 for a single user Microsoft Office/Pastel Accounting and over R25 000 for five users. This leaves the TurboCASH/Smartsuite offering at around 10% of the competitive market price.
"We are really struggling with credibility. With this kind of price differential, it is easy for the market to believe that we have an inferior offering. We are faced with the problem of convincing the channel and the users that we have a better, or at least equivalent product. Our advantage comes because TurboCASH is developed in rands and marketed exclusively in SA. We have covered ourselves forward against exchange rate increases for Lotus products. The logical move would be to increase our prices to around R3 000 per unit and still be less than half the price of the competition.
"However, Pink is taking the longer term view that the SOHO market in SA will become the dominant market. There are over 350 000 small businesses in SA (less that 10 employees). These companies are unable and unwilling to pay the high prices demanded by dollar-based developers. Recent months have seen a dramatic increase in our retail sales. We have become the leading retail product in our category in CNA, Incredible and Makro. Our OEM business (TurboCASH bundled with new machines) is also producing good volumes. If we hold our prices now, sense will prevail and Pink will gain a dominant position in the SOHO market.
"We believe that what the SOHO market wants is a simple product that gets the job done. Price and stability must be the driving factors. What the software industry is producing is more and more complex products each more difficult than the previous release, requiring a team of consultants on standby for support. This is what is leading the mainline software companies to start talking of "sustainable annual revenue models, ASP rentals and software licensing". We are going the other way, making our products less dependent on outside support.
"Ninety percent of small business applications are e-mail, accounting and office management. So our offering of TurboCASH and Lotus goes right to the heart of software needs for small business. Recent statistics released by Microsoft say that less that 16% of small businesses have legal copies of Microsoft Office. Our opportunity is to persuade these users to switch to the TurboCASH/SmartSuite Bundle rather than spend thousands of rands legitimising their products.
"The nature of this move means that we exclude much of the VAR (value-added reseller) business in favour of traditional retailers. VARs would rather sell a product that they buy for R6 000 and sell for R9 000, rather than one they buy for R600 and sell for R900. This is a real problem to us. Our position, however, is that although the VARs are unable to make margin on our products, at least they do not have to pay thousands of rands to use our products. To help the VAR channel, Pink is developing plug-in technology, reports and add-ons that will enable VARs to add value to TurboCASH. So they will be able to buy TurboCASH from us at R600, differentiate it, and sell it for R9 000, with the addition of their own add-ons."
Companies interested in becoming a partner or VAR for Pink Software should visit www.pinksoftware.com or mail Philip Copeman at philip@pinksoft.co.za
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