car dealers

We Listen to Our Customers — Pricing Change

I get an email almost every day from a consulting firm that specializes in helping businesses figure out how to price their products or services. I guess that means it’s an issue that’s not easy to get right.

OUR INITIAL THOUGHTS ON PRICING

When we began thinking about the pricing of Auto Load Logic’s service our guiding principal was a desire to align our interests with those of our customers. The first conclusion we drew as we talked through the question of alignment was that a monthly subscription model was the wrong one for this market.

Obviously there are others who have used the monthly subscription approach for years. They would probably argue that their ability to maintain that model means it’s reasonable. We think it just means that they haven’t been forced to consider a change.

So, we began with the conviction that we should not charge for our product unless and until it is used by a customer. When our system allows the customer to generate revenue, that should be the trigger for our generating revenue.

Sounds simple, doesn’t it?

Well, maybe not, because that’s only the first of three issues to address. It answers the question: What condition gives rise to a payment obligation? We still have to tackle the questions of the basis on which the payment should be calculated and the rate of payment that should be applied to that basis.

Our thought was that the rates charged to professional vehicle Shippers, such as car dealers, ought to be based on the number of vehicles shipped. We still think that’s appropriate and the dealers we’ve worked with have agreed. So we got that one right.

When thinking about the Brokers and Carriers we thought, initially, that an alignment of interests would be created if we based our fees on the amount of revenue those users generated from a vehicle shipment. As their revenues increased or decreased, ours would as well, and we’d all be in the same position as prices rose or fell. That seemed fair to us.

MOVE TO PLAN B

As we began to work through that system in detail, though, we found more and more ways that a model like that could become problematic. It began to seem like it would require us to be too closely involved in our customers’ transactions. What seemed clear and reasonable in theory didn’t seem so simple in practice!

So we moved to Plan B.

Plan B was based on the well-understood fact that the costs of most of the inputs into the vehicle transport process are distance-determined.

Fuel, driver compensation, truck depreciation and maintenance, etc. are clearly functions of distance. And many others, such as insurance, licenses, and so forth, can be pretty easily estimated in terms of cents-per-mile driven and then converted to cents-per-mile per-vehicle-shipped.

So we thought it would be easily understood and intuitively reasonable to price our product to Carriers and Brokers in terms of cents-per-mile.

But what WE think doesn’t matter much if our customers think differently!

As we entered the market on an initial “soft launch” basis during the summer, we found that this model caused both Brokers and Carriers a lot of problems.

What we thought was very simple didn’t seem that way to the users.  For whatever reason – and a number of reasons were given – what we thought was an easily understood and workable approach was seen as complicated and difficult to our initial users.

The last thing we want in bringing Auto Load Logic to the market is a problem explaining or justifying pricing structure. So….

 WE HEARD YOU

We’ve modified our pricing structure as we ready the release of ALL 2.0.

The new structure is still a pay-on-use model, which we continue to believe is fair and appropriate and acts to align our interests with those of our customers. But it is the ultimate in simplicity. It extends the price-per-vehicle-moved approach to both Brokers and Carriers.

PRICING CHANGE

Our pricing model for Brokers and Carriers is now as simple as this:

Brokers pay $3.00 per vehicle moved using ALL.

Carriers pay $2.00 per vehicle moved using ALL.

That’s all there is to it.

No need to measure revenue. No need to measure mileage. Just count the vehicles and multiply.

And if the count is zero, the cost is zero.

The only exception is that the first 15 vehicles moved are on the house!

Registration as an ALL user is simple and it’s free.

Check us out and register at: www.autoloadlogic.com.

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Let us know what you think. We’re listening!