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Microsoft switches up CRM Online licensing model, aims at Salesforce.com

Microsoft is rolling out a more flexible licensing policy for its CRM Online application that could make it more competitive with the likes of Salesforce.com, but in one instance it also introduces a price increase.

While Microsoft’s CRM (customer relationship management) software uses the same codebase for both the online and on-premises versions, until now CRM Online was available at only one pricing level, currently $44 per user per month. Meanwhile, on-premises CRM customers have been able to choose from three different pricing models.

“Many of our online customers have asked us for more options,” said Paco Contreras Herrera, director of product marketing for pricing and licensing, in a blog post Monday. “They want the same flexibility for our online service.”

Three pricing options

In the next major update to Dynamics CRM, which is scheduled for later this year, online customers will be able to choose from three different pricing levels.

At the high end, Dynamics CRM Professional Edition will cost $65 per user per month. This is aimed at those “who need the full capabilities of Microsoft Dynamics CRM including sales-force automation as well as marketing and customer care,” Herrera wrote. “We believe most users will find this license best fits their needs.”

Microsoft will also offer a Basic edition at $30 per user per month, which is aimed at “sales, service and marketing users who need to manage accounts, contacts, leads, cases and access custom applications as well as for business analysts who require reporting capabilities,” Herrera added.

Finally, an Essential version will cost $15 per user per month and is meant for “light-weight users who need to access custom applications developed in house or by our vast network of partners,” he wrote.

In addition, online and on-premises licenses “will be equivalent, making it easier for our customers to compare and decide what works best for them,” Herrera said.

Actual pricing for CRM Online “might vary by geography,” and don’t include fees for “add-on services such as additional storage, testing and production instances,” Herrera wrote.

Eyes on Salesforce

Microsoft’s moves seem intent on helping it compete with Salesforce.com, which has offered a range of access tiers for its cloud-based CRM application.

The monthly charge for Professional Edition will bring Dynamics CRM in line with Salesforce.com’s Professional edition, which also costs $65 per user per month, but also amounts to a $21 per month price hike for customers that want the full range of Dynamics CRM features.

Via email, a representative for Microsoft acknowledged that “costs have come up some,” but added that as of the launch of Dynamics CRM 2013 later this year, mobile licenses will be included at no additional charge.

The mobile access policy will apply to all editions of Dynamics CRM, both online and on-premises, Herrera said in his blog post.

Microsoft is also “offering our customers more freedom to choose and the ability to mix and match licenses, so they are not forced to fit every user into the same license,” Herrera added.

While Herrera didn’t state so explicitly, this also means that CRM Online customers now paying $44 per month for licenses attached to users who don’t need to use much of the system could move them to lower-cost tiers, which would help mitigate the price change tied to the Professional edition.

“The per-seat charges continue to be very aggressive compared with the list prices of other products which should help win new customers, especially from companies that already use one of the Microsoft ERP packages,” said Denis Pombriant, managing principal of Beagle Research, via email on Monday.

Even at $65 a month for Professional Edition, “it’s a good deal for the functionality,” Pombriant said.

Meanwhile, with Microsoft’s mobile application policy, “it appears the company is extending the seat to any device that a user wants to access the CRM system from, which eliminates the discussion of how many times a sales person should pay for a seat if she or he has a desktop, laptop, tablet, handheld, etc,” Pombriant said.

“At the same time it preserves the idea that what runs on the devices is still considered a seat and not a freely accessible browser application written in HTML5,” he added. “At some point in the future, you might see Microsoft saying that the license is on the device and it’s free on the desktop.”

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