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May 1, 2003
By Tara Seals
By Tara Seals
new pricing model is making inroads in the conferencing market: Flat-rate
pricing. Purveyors say that rather than taking away from high-margin, per-use
revenue, the all-you-can-eat approach helps providers tap greenfield markets and
add value to existing customers.
For instance, Raindance
Communications Inc. launched its flat-rate product in early March, to go after
the small office/home office (SOHO) market, an area not typically part of its
customer mix. The provider established a specialized inside sales force to make
calls on these targets, rather than using its usual sales representatives. It
plans to roll it out to the channel in mid-to-late 2003.
"It’s definitely going to
increase our account penetration in that area," says Chuck Tamblyn, product
manager at Raindance. Small businesses, he explains, may never have used
conferencing before, but this pricing places it within their range. "As
long as you use it three or more times a month, this is great [pricing],"
Another driver for creating the
offer, he says, was the demand for a product that unbundled long-distance costs.
"We wanted to leverage our current carrier-grade architecture in a way that
didn’t involve long distance," he explains. "Many small businesses
have negotiated really low rates on long distance, so they can use that and then
our low flat-rate pricing, and that’s a pretty powerful combination."
Besides the lack of toll-free or
local access, the service is a basic audio offer with a Web interface for
showing PowerPoint slides and other materials. It doesn’t include advanced
features like Webcasting, dial-out or recording/playback functions, typically
offered at additional costs in the pay-per-use model. The pricing options are
$59.99, $99 and $199 for up to 25, 50 or 125 participants at one time.
The packages also come with only one
moderator code, a big reason this is primarily a SOHO offer. "Small
businesses don’t mind having only one, but if you ask an enterprise to
administer one moderator code among a large number of people and locations, it
gets messy," says Tamblyn. "Also, you can only have one call going at
a time. It’s almost like a conference room idea — you book the room and
everyone else has to wait."
The pioneer of flat-rate
conferencing is arguably A+ Conferencing, which launched its "One
Rate" flat-rate, reservationless offer in January 2001. It is available
primarily via agents and resellers, and it targets larger companies. The retail
rates vary according to the number of seats, but for up to 10 PIN codes it could
run as high as $99 a month for audio, with Web added for $175 per month.
"The push for this came from
the multilevel marketing arena," says Burns. "They could easily have a
need for 1,000 to 5,000-person calls, around 60,000 minutes, and that’s just
prohibitive [in a per-use model]." Burns decided to offer these companies
an alternative to holding regional meetings and conventions, and the flat-rate
traffic is now outstripping traditional per-use traffic on the A+ ports.
"You can stack these people in,
and we thought it would busy up our ports, but it’s not like everyone is using
it all the time," says Burns. "The volume really has been manageable,
and we’ve been very successful."
Like Raindance, everyone using One
Rate pays their own way to the A+ Conferencing bridge, but Burns said he can add
an 800 number for a low rate, around 4.9 cents per minute. The One Rate feature
set is the same as the per-use offer, including mute, digital recording and
Burns recommends that agents and
resellers offer both pricing models — flat-rate for heavy users and per-use for
the occasional user. "[Agents] really like it," he says, "because
they’re able to be very competitive, no matter what kind of user they
Burns says some customers still
request per-use conferencing. "The corporate world and America has been
brainwashed into a per-minute paradigm," he says. "For instance, more
than 50 percent of lawyers use AT&T, which runs around 81 cents per minute,
because AT&T owns this market and people are just used to that. We’re trying
to show them it doesn’t have to be that way."
Genesys Conferencing is capitalizing
on the high per-usage rates typical in the arena by marketing the flat-rate idea
as a way to control companywide spending in enterprises. "They can plan how
much they are going to use and not spend more than they need to," explains
Denise Persson, executive vice president of global marketing for Genesys.
Genesys opted for a bulk-rate
conferencing plan, offering say $200 for 2,500 minutes per month enterprisewide.
The features and customer experience is the same as its per-minute service, but
Genesys requires a one-year commitment. Pricing varies according to the number
of users and minutes.
"This is primarily for existing
conferencing users," says Persson. "They already know how much they
use and are willing to sign the contract."
"Most clients really do want
per-minute pricing," says Persson. "But this does appeal to heavy
users and the feedback from big customers has been very positive."
The company also offers unlimited
use of its Web conferencing and collaboration tool, Genesys Meeting Center, for
$39.95 per month, with audio costs an additional expense. The offer is good for
up to 15 participants. Additional participants are charged $0.40 per minute or
$15 for the meeting, whichever is less.
Newcomer Easy Online Meetings offers
an unusual model: It charges a flat fee of $20 per meeting, for unlimited length
and number of participants, with no subscription or commitment. The offer is a
basic, stripped down slide capability users can add to any conferencing bridge
or point-to-point calling service they already have. As such it may be the first
service to be mass marketed.
"There’s no upfront licensing
fees, upfront investment or yearly licensing fees or anything like that,"
says Bruce Krulwich, an Easy Online Meetings co-founder. "We are trying to
avoid a lot of the complications a lot of other services have because we want to
have something that the mass market can use."
Some say the industry is seeing just
the beginning for the flat-rate model. "There’s a bit of missionary work
still required," says Burns. "But you’ll start to see more
conferencing — and more telecom services in general — go to a flat-rate
Meanwhile, Raindance is researching
a flat-rate approach to larger enterprise customers and hopes to have something
to market towards the end of the year.
Raindance Communications Inc.
Easy Online Meetings
Varies according to volume.
$59.99, $99, $199 for up to 25,
Bulk-rate pricing. Example: $200
$20 per meeting, unlimited
Full-featured. Does not include
Basic audio with scaled-back Web
No-frills online slide
Larger, high-use companies such
Existing business users who know
Read more about:Agents
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