You might ask, why does the price of Analytics companies vary? You can see the price vary from free to seven figures. The cost basis of these companies, is talent, infrastructure and R&D. With some of the offerings, more of your money is going to one of these three buckets.
The way analytics companies incur cost is with more traffic/events. So pricing tends to follow that scale. With some rounding out for R&D and the level of talent put towards each use case. Depending on the business model of the firm you will see variance in pricing as they allocate their capital towards those three buckets.
Here’s an overview of the typical business models:
Service + Tech
Higher end Enterprise services, may charge a lot more for their offering. But they support it with industry experts, who also offer additional services to those clients. This can solve two problems, an internal resource problem or lack of internal capabilities and technology.
Your pricing helps cover those talent costs and a portion goes to the technology. The downside of this model is the long term investment in technology is lower.
Some advertising firms, offer analytics for free, they do this, as they can offset the revenue loss through a gain in additional intelligence, potentially selling the data and you spending money elsewhere in their business.
In competitive environments they may invest more in R&D but otherwise they are not incentivized to do so.
Free through to tiered pricing, offers a light weight version to get started with. And then paid tiers for more features or usage. Free users help offset investment in customer acquisition. And paid users help the investment in R&D.
In the long run, the companies that can invest the most in technology, can provide the most value to the most customers. This tends to happen in the technology bucket, but isn’t exclusive, if there is a highly competitive environment, the Free companies may have to increase their spend.
At Nudge, we have landed on the technology model, because it aligns with our values. We want to invest as much of each dollar we earn, back into the customers that support us.
Why are some firms so cheap?
It may be they aren’t investing as much into their product or service. They may have stood up a product but are not continuing to invest in it. Or it could be, they themselves have made a mistake on the level of investment required in the long run. Or they could be discounting, to support growth.