Will Microsoft Dynamics CRM 2011 Slow Salesforce? | Microsoft Executive Interview

by Lauren Carlson

CRM Analyst, Software Advice
February 22, 2011

Microsoft Dynamics CRM is now roughly one-third the price of Salesforce.com. Can this low-price strategy help Microsoft gain a greater share of the CRM pie? In the second clip of our 7-part series, Brad Wilson, General Manager of Microsoft Dynamics CRM, discusses the pricing strategy behind Microsoft Dynamics 2011.

MSCRM Video title2.002

Tune in tomorrow when we ask: “How Many Customers Really Want CRM in the Cloud?”

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Tom

To me, the tactic of lowering price so significantly is tantamount to MS acknowledging the value they provide relative to competitors, such as Salesforce. If I buy a car for $2,000 vs. a car worth 6,000 dollars, I’m making a tacit acknowledgment that I have sacrificed quality and the benefit of expense.
Of course, my example greatly simplifies the matter though I believe that the underlying notion holds true. Reducing cost so much means one of two things: 1) MS is using this as a loss-leader with the expectation that customers will use other MS offerings (by requirement or organic ecosystem adoption) or 2) the product they are selling offers substantially less value. While people biased against MS would likely suggest #1 is the reason, I would have to assume it’s the second reason. This is because MS has demonstrated the willingness to maximize the market value of their offerings whenever possible. Only products that have not established dominant market share are discounted in such ways.
http://leontribe.blogspot.com Leon Tribe

Lowering the price significantly? They have discounted 25% for 12 months as a promo, then it goes back to the normal price which USA and Canada have been enjoying for quite a while now. As for the comparison to the Salesforce price, perhaps Salesforce is just too expensive. They have been practically the only player in the international market until now so it make sense that they would set their price high.

There is no doubt that Microsoft’s aim is to grab market share and slow down Salesforce now that Dynamics CRM has hit the international market but I don’t think it necessarily says anything about the quality of the product.

If you think the pricing for CRM is low, look at the pricing for Office 365. Some of the most ubiquitous software in the world being offered for pennies. Does it mean Microsoft Office and Exchange are now rubbish? No, it is just easy for Microsoft to be a cost leader, especially if they can secure volume.