Pricing Strategies: Behind the Odoo Price

Sébastien: 0:00

A lot of customers have a good idea of what they want, but they don't know how to deliver it. And that's basically our job to help them in that process. We realised that actually it was not the price that was wrong, but the structure of the pricing. And so that's how we started to think about it.

And the customer told me: 0:14

"You know, I'm afraid because you send me an email saying that I'm going to pay less. I don't believe it. I don't trust it. Should I sign?" We know for sure that we'll lose something like 10 to 15 millions. Today, we have one price and that's it, and you have access to all the applications. And that's really a game changer.

Olivier: 0:31

Hi Odooers. And welcome back to Planet Odoo. Let's start with a simple question. What would you do with $25 a month?$25 is approximately the cost of a Starbucks a week or lunch with a friend. But it could also be the budget you need to start and run your business from scratch. Indeed, Odoo is now available for $25 a month. In today's episode, we will discuss how such low pricing is possible and the broader reflection behind it. To explore this topic, we welcome Sébastien Bruyr CCO at Odoo. We'll see how a company can position itself in terms of value creation and profitability while growing and keeping its customers happy. Let's get started. Hello, Sébastien.

Sébastien: 1:10

Hello.

Olivier: 1:11

So today we had to talk about the commercial side of things a little more. But first, before getting to all this, let's talk a little bit about you. So how old are you? How long have you been in Odoo?

Sébastien: 1:22

So I'm turning 36 in a couple of days, actually. I joined Odoo actually ten years ago in 2012 when it was still Open ERP, and I joined as a partnership of recruitment, actually. So basically at that time Odoo was still open ERP and we were focusing mainly on the distribution of the software through partners. So I was responsible to recruit those new partners that we like to redistribute the solution. And I did that during something like two years. Then we had the switch of the business model. We went from Open ERP to Odoo, and I joined the direct sales team after those two years, where really the goal was to distribute the solution directly. And it was really interesting because it was a brand new story, a brand new way of working as well. We had really to learn how to implement the solution, so it was really interesting. And then I continued to grow in the company. Also, actually, I left Odoo for a couple of months as well.

Olivier: 2:30

Oh, surprising.

Sébastien: 2:31

Yeah. I left at the different difficult period, I would say. And then my manager called me back seven months after to take over the team where I was. And then after a couple of years, I took over the all sales floor.

Olivier: 2:45

Okay. So you really accompanied it through nearly all its history.

Sébastien: 2:49

So yeah, I mean, yeah.

Olivier: 2:51

A big part of it.

Sébastien: 2:52

Yeah, a big part of it, Yeah. I'd say.

Olivier: 2:53

Yeah. The part where the the legend started to really grow. So could you tell us more about your. Your day to day job? What is your role exactly? How does it work?

Sébastien: 3:05

So I'm chief commercial officer. So it means that I'm in charge of the strategy and of the sales side of the company. So basically, it's difficult to give a day to day job because obviously I do not have to do list for every day. But I would say that depending on the period of the year, I will do different things. For example, at the moment I'm really busy with the budget because obviously we have to build a budget for next year. Yeah, I would say my role is more to be a facilitator for the sales people. I'm making sure that they have the right tools, that they're able to do the job the best way possible. I'm pretty sure that some of them will say that's not true because I'm not giving all the discount they expect, but yet it's actually my role. At the same time, also the guarantor of the strategy that we put in place, I have to make sure that we go in the direction that we have decided. And so that's basically what I do. Now, if you look at the day to day, it really depends. You know, I have an open door, so people are coming in my office and.

Olivier: 4:07

It's challenge based if I get it.

Sébastien: 4:10

Exactly. So they come to ask questions. They have sometimes difficult scenarios. So we have to adapt.

Olivier: 4:18

Do you have an example maybe of some tricky case.

Sébastien: 4:21

Well, you know, sometimes you have customers willing to have really specific projects where we have to decide whether we go for it or not or how we're going to actually address it, how we can maybe change their mind sometimes as well, because we believe that what they expect is not exactly what they should go for. And so that's a bit the logic that we put in place and that we try to adapt because at the end of the day, it's true that a lot of customers have a good idea of what they want, but they don't know how to deliver it. And that's basically our job to to help them in that process. And sometimes we need to make them evolve a bit in the in their thinking.

Olivier: 4:57

Okay. Yeah, that's the old story Anthony alsways tells "Ah but nobody would have asked to remove all the buttons on the smartphone". So that's the idea to just tell them, okay, but you could do it this way and it would be even better. Okay. So one of the big decisions that you made recently, well, for version 16, was about the new pricing. What change exactly? How does it compare to what was there before?

Sébastien: 5:19

Before we had a pricing that was designed with the users and the application. So it means that you had to pay for every single user you had, plus every application that you would use. It was not that clear for people. So we had to explain really how the pricing worked and it was not efficient. And so today the way it works is actually quite simple. You have one price, one price per user and that's it. And you have access to all the applications. And that's really a game changer because thanks to that, now people can really benefit from the power of the solution. They can use all the applications at one cost.

Olivier: 5:57

Okay. So could you maybe give an example? So if I have like three users, I want everything what, what it cost me exactly.

Sébastien: 6:04

But basically the price per user is $24.9. And so that's the cost that you will pay per user. So basically you multiply that by three and that's it. That's the price you're going to pay.

Olivier: 6:16

Okay, So whatever I'm using and it's when I first deal there or?

Sébastien: 6:20

Yeah, so we still have the main logic. So today we have three plans. We have the one free plan, which is actually the one where you can get one application. For instance, you will take website and you will be able to use the website of Odoo for free. You can have any application, so you can have CRM, you can have accounting, you decide where you want to start. Then you have the standard plan where basically it's kind of out of the box solution, where you can use all the applications, but you cannot do any customization. It means that you really use the the tool as it is and you cannot do anything extra. And then you have the last plan, which is actually the custom one where you can do development. You have access to Odoo Studio, which is one of the most powerful tool that we having in the solution as well. You can also connect or do through API to XML tools and you can also have multi companies. So that's, I would say the most advanced part of the plans. And then the rest is really depending on what you need. I would say that for most of the SMEs, the standard plan is is really sufficient.

Olivier: 7:22

So the idea is to have something that is growing with the company of the customer and adapting to it, so it's cool. So about this price change and the fact that we now build really per user, what was the decision process that led to this? How did we come to this and why did we that?

Sébastien: 7:38

So it's actually funny because everything started last year when most of the competitors decided to raise the price. And so we had the thinking. Even though we always try to decrease the price, we had to think about it right. And we were thinking 'okay, should we also look at it and raise a price?' And in a couple of days we decided it was not the right moment that we don't want to do it. We want to keep this accessible price. And so basically the discussion was shot. Now, the reality came a bit later because we realized that more and more of our customers had difficulty to understand the price. And when we start to look at it, we realized that the global logic of our pricing was not working as expected. Because if you think about it today, our main focus is the SMEs market. And if you take an SME, the cost was way too high. Actually, if you had only one user, it was costing something like €90 with four or five application, which is really, really expensive. And so we realised that actually it was not the price that was wrong, but the structure of the pricing. And so that's how we started to think about it. And instead of raising the price, we just decided to completely change everything to make it way more affordable for the SMEs market. And so it took months, right? Because whenever we do that kind of exercise, it's something really strategic and it has a massive impact in the future.

Olivier: 9:04

It's not something you can change like that and then see if it works.

Sébastien: 9:09

Sure, exactly. And the last time we changed it was actually in 2016. So it's been like a long time with a lot of stability as well. But before that, we were changing the price basically every year. So that's also something that we were used to in a way. And so that's why we have been really careful about the change and we thought about it for long. We did a lot of analysis. We try really to design the price that would fit the best or strategy. Obviously, we want to digitalize the SME market and we want them to have the best tool possible. That's, I would say, the motto that we keep in mind. And for that, we know that today business tools are more and more into productivity and that actually companies realize that. Because a couple of years ago it was not the case, just digitalize the business was already a massive step. Today after two years of COVID, they know that they need to go in that direction and they realize that sometimes just esign application can change the way they work. Right. And so that's why we wanted to really push that that new pricing, because with that pricing, you can have everything at once and you don't have to pay extra. There's no no blocking points anymore. So that's really the direction that went for.

Olivier: 10:24

Yeah. So the idea is really to encourage them to use more and more things and try and experiment with things they wouldn't have paid about before.

Sébastien: 10:33

And it's really a bottom-up approach, because the goal is to provide those applications from day one to all the users. That way they will take the initiative. You know, a bit like if look at Google today, you can test a lot of application to design to do surveys or whatever and the users are actually using it because they need a tool like that. That's a bit the logic that we took as well. So most users will be able to test e-sign, will be able to test Knowledge, you know those productivity apps and if they like it, they will start to use it and good that will be beneficial for the company.

Olivier: 11:08

Also how it integrates with the rest. And it's way easier than just going looking at the list of what's available, trying on some run bot or demo database, whatever, and then maybe decide to pay for it. And it's way more I would say.

Sébastien: 11:20

And on top of that, it's also really important because what we see in the SME market today is that they use a bunch of solutions. You know, if you take the classical SME and I would say even startup, they will most probably have Salesforce for CRM, then they will have another tool like DocuSign to sign document, they will have Slack, they will have a bunch of tools that are not integrated. And so at the end of the day, they lose a bit in actually efficiency because simply they have to do double encoding. They lose a lot of time. You know, they will spend time putting the information in to three different solutions. So it's not efficient. That's what we want to show them. Try the solution. Start maybe small. You have the one app free so you don't even have to pay anything to start with. And then you grow as a solution and then they will see what's the benefits of using a tool like Odoo that's really fully integrated.

Olivier: 12:10

That's an interesting approach because you're really taking the value of the product, putting it in front of people and saying "Look at it and just convince yourself."

Sébastien: 12:18

Yeah, you don't have to trust me. Do it yourself, it's there. You can test it for free so you don't have to believe me. You can experience it yourself.

Olivier: 12:29

You were talking about the fact that before 2016, if I remember what what you say that we used to change a price every year. So I guess from that we'll just say that you we got some experience with that. Well, the situation where we regretted changing the price and I don't know, maybe you have an anecdote for that and things we really didn't want to happen again at this time.

Sébastien: 12:46

But you know, it's funny because before 2016, I was not involved in the decision making of changing the price. And I remember that we had one pricing that was really terrible. I mean, it was really terrible because it was a kind of multiplicator. So basically it was really expensive when you were a small company. And as a salesperson, we were really on the field and feeling like this is not a good idea. How can it work, you know? And so yeah, it was really tough. And actually we basically, I think after a couple of months said, okay, it will never work, so we will stop. So yeah it was really a problem. The good thing about this pricing is that we will learned from that experience. So we took the time to really, when we were focused and we were really convinced about the price we had, we took a lot of salespeople in the room. We talked a lot with partners, we took a lot with also some potential customers to see what they thought about it. And the feedback was always really positive. And so that's basically, I think the learning that we had compared to the previous change that we had in the past, and it was maybe also a bit less mature. So that's quite normal

Olivier: 13:57

It's good that there was this I didn't know there was this this kind of community thing discussion, just to be sure that we're not going in the wrong direction and check that it's okay.

Sébastien: 14:06

You know, the impact is actually really big because today we have 4200 partners. So changing the price means also changing their business, right? So we need to be aligned with them. We need to make sure that, you know, those guys will keep the benefits from the price. So it's really important. That's why we wanted to really talk to the key partners, that way we have their feeling and they can really participate to the evolution of the future of the company.

Olivier: 14:38

Yeah. It's an interesting approach. Is it something that we do on other decisions like that or?

Sébastien: 14:42

Yeah. I would say most of the time when there is a strategic decision that we take, we normally always talk to to the community in general. I mean, you know, you're in the R&D, so you know how it works. We also take the time to talk to partners, to do some surveys to understand what are the main focus that we should focus on. At the end of the day, we take the decision. And our interest is really global. So that's also really important. But yes, we try more and more to really have those discussions and to listen to the community, because at the end of the day, that's what we are. We are a community. So we have to follow that.

Olivier: 15:18

I think it's a good thing because it's not something that everybody would imagine works like this for a company our size, and it's still in this open source, open corner mindset that we were explaining in the last episode. And so how did it go? So far, it's been a few a few months,it was in October that we announced that with the new version of Odoo. What are the results now? How's it going?

Sébastien: 15:43

So basically, you know, at this stage it's still really complex to have a clear vision. Now, at least the goals that we set are really good because simply what we wanted is to raise the amount of customers that we have. And if we look at the two last month, I think we multiplied the amount of new customers by 2.5. So, you know, everything is going as planned. Now we'll see in the future, if it's just a first step or we don't know. But I think that no, for now, the price is welcomed on the market by the customer, by the partners, etc.. So it goes well. But again, we need to see at the end of Q1 how it goes to really have a clear vision.

Olivier: 16:27

Would you say that we sacrificed, if I might say so, part of our immediate benefit of profit for this change?

Sébastien: 16:33

Yeah, for sure. I mean, we know for sure that we'll lose something like 10 to 15 millions straight, simply because what we do, we have different templates of contracts, we have monthly, we have yearly and we have multi years. So it means that at the anniversary, if your contract is supposed to decrease, your contract will decrease. So it means that we'll have a loss of revenue there. For the one that will potentially increase it will be capped at 7%. So it means that we'll lose revenue. Now, the reality behind is we see it as a back off to to better blow up in a way. Right. So it means that with the new customers that we're going to get in the future, it will compensate. And it's a kind of balance that we take. It's a bet that we take.

Olivier: 17:16

An investment we might say.

Sébastien: 17:17

Exactly. It's a kind of investment. Exactly. And, I think that for now, it's exactly as it goes exactly at you supposed to.

Olivier: 17:26

And what's the next step? What do we expect in the near future? What can you say?

Sébastien: 17:33

So basically what we expect is really, again, to help the SME market. And so if you want to help the SME market, we need to see a kind of explosion in the SME adoption. For now, that's what we see. So we are happy about it right. Now, we want also to keep on growing massively on the mid-market and corporate because that's something that we started three years ago and it's also part of the thinking that we had on the pricing. And so if we keep on growing at the same speed, then it will be perfect and exactly where where we want to be. And I still expect, even though we have a decrease in revenue this year, I still expect massive growth for next year.

Olivier: 18:10

Okay. So what was the reaction to that to the price change? So we talked about the involvement in the community in this in the decision. How did the community as a whole react to that? How did the customers react to that?

Sébastien: 18:20

You know, it's funny because when the new pricing was released, we sent a bunch of emails to our customers, to our partners.

I mean, we send an email saying 'okay, hey guys, good news: 18:27

now you're going to have access to the full solution.' I was actually with a customer because we had the meeting on site and the customer told me 'You know, I'm afraid because you send me an email saying that I'm going to pay less. I don't believe it. I don't trust it. Should I sign"

Olivier: 18:48

Is something fishy?

Sébastien: 18:50

Yeah, exactly. So people were actually not really believing it, because it's not

that often that a supplier is sending you an email saying : 18:54

' Hey, by the way, you're going to be less." You know, I don't remember any other example.

Olivier: 19:02

Me neither. I don't think people see that very often.

Sébastien: 19:04

Exactly. So I think that the reaction was pretty much like that. You know, people were really amazed by the situation and and yeah, that's the feedback we had. I think that even for the new customers, there were really'okay basically it's cheaper than a coffee right' because you pay $25 a month just for one user, you know, but on the entire period while if you go to Starbucks, I think that's the example. I mean, you know how much it costs to have just one Starbucks. Maybe it's not a good benchmark because we should go for a cheaper coffee, but at the end of the day, it's still cheaper.

Olivier: 19:47

Okay, cool. So we've talked a lot about the pricing. Let's jump to another subject about the evolution of Odoo and our growth. So we are still growing, I guess people know that, otherwise they wouldn't listen to this. And so, we have already a bunch of offices around the world. Which ones? Actually, because maybe people don't know where we have offices.

Sébastien: 20:08

I will talk about the strategy and then I will go through the offices. So before 2022, the strategy was really to have central offices. So we had offices in the US, in Europe, in Asia, in Dubai, and all those offices were actually managing the whole region. Then we decided to change a bit the strategy and to go a bit more local. Simply because sometimes, I mean, you need to be local to address the market, right? So now we have an office in San Francisco, we have another one in Buffalo. That way we manage the both sides of the US. We have an office in Mexico as well. And the news is also that we're going to launch an office in Brazil this year. Then we have the European office in Belgium. It's the headquarters. So that's basically where everything started. From this office, we're going to also open new offices in Europe, like Spain that's already open since two months now. Germany is open since last month. We have the Italian office that will be also launched probably during the first semester of 2023. We opened also the Kenyan office, so in Kenya to manage really the old Africa because it was still managed from Europe as well, from Belgium. We have the office in Luxembourg as well, which is also an office is important. And then, we have the office that is managing the Asian market, which is actually Hong Kong. And from Hong Kong we have open now the Australian office. I mean it's not yet open, it will be open in January, something like that. But actually the director will soon leave, so it's almost there. And the next one to come from that region will be probably Indonesia, because we also have a massive traction there. Then you have the office in India that is existing since I think since the very beginning and growing quite fast. And then you have the office in Dubai as well as managing the old region. And I think that I did the tour, did I missed one?

Olivier: 22:11

I don't think so. don't know them as well as you do. Sorry if we if we forgot one.

Sébastien: 22:19

So that's really the idea, today is to have also local offices to be able to address the strategy on the long run. So as I said earlier, we are now really focusing as well on the middle market and corporate. The reason for that is, actually we didn't really decide for that, because we've been really focusing on the SME market for long. And we've been realizing more and more that a lot of them, we call it MSI - so mid-market and corporate companies- were calling us saying, 'Hey, by the way, what you do with SME? Do you do it as well as mid-market companies?'

Olivier: 22:57

So it was an opportunity.

Sébastien: 22:59

Exactly.It's a matter of opportunity. And so we have decided to address it properly. So with the right team, with a real methodology as well, because it's also important, it's a different way of thinking, I would say.

Olivier: 23:12

I assume they don't exactly work in the same way as SMEs.

Sébastien: 23:15

Exactly. And implementations are longer as well. So you need to have dedicated teams, etc. So it's a bit different. And actually, we manage it both on the direct side but also on the indirect side. So also, what we realised is that it's difficult for a mid-market and corporate company to actually work with a partner sometimes because they're

like : 23:38

'Yeah, but who are their other researchers, etc.. So we are also helping today our partners to actually get those customers with a collaboration, right? And so that's something important for the future. And that's why also we want to go local to be able to really be next to those customers and to convince them that Odoo is the right solution for them. And together with the partners, we're going to grow those markets. But for that, we need first to build the workforce locally. We need to have people that know the solution and know the complexity of the country where we are.

Olivier: 24:11

How do we do that? What is the process? If you decide to open a new office somewhere, what do we do?

Sébastien: 24:20

So first we look at the opportunity. Today, the reason why we started with Italy, Spain, Germany, etc. It's mainly because those markets are actually already quite strong. You know, it's not new for us. We addressed them from Belgium for years and actually we have quite strong activity there. Now the reality is that we see as well that the potential is not a 100% simply because we are not locally there. So when we see that potential, we see if we have a potential director because that's the most important topic. We want to make sure that we have the right director and if we have. Then we see how we can handle it. As soon as we find the right person to launch the office there, then we're going to go for it. And then we're going to launch it with the direct sales first. So the direct sales are the ones that are really selling directly to the SME market and with also the consultants that are able to really implement those projects. Second, we're going to add all the different sales teams that we have. We duplicate basically the model of Belgium in that country, but step by step, because we want to make sure that they will be efficient.

Olivier: 25:32

All new people at once? Or you take a bunch of people going with the director to the new site and then recruit people?

Sébastien: 25:39

Yeah. So, it depends. If we have enough people, sometimes we send a couple of people that will actually be really the pillars of of the office. But for the rest, yeah, we try to have a maximum of local people because basically they are the one who knows the culture. They know the specificity of the market.

Olivier: 26:00

They know how to communicate.

Sébastien: 26:01

Exactly. So I would say that in general we have maximum 2 to 3 people that are coming from Belgium, but normally they know as well the market. So if I take an example, in Kenya, when we launch it, it's actually a colleague whos born and raised in Congo. He was working with us for I think seven years in Belgium. And then he went in Kenya and he launched it with a couple of Belgian guys as well. So they are three now from Belgium, but we are around 30 people already, and so the rest are really local people that know the market very well. And that's basically what we try to duplicate every single time. The only thing that we try to do is make sure that they will benefit from the learnings we had in the past. We don't want them to go through the same complexity that we faced when we launched the different teams and the different practice. So we want them to take the shortcuts and for that they also help from the Belgian office with the knowledge by just trainings or just providing people for a couple of months sometimes to make sure that they can go a bit faster.

Olivier: 27:06

Okay, Okay, cool, cool. So the the critical thing, if you want to become a director, is having the experience and having this kind of proximity with the region we're targeting.

Sébastien: 27:14

So, yeah, and not always because in some cases it's what matters really is the language, right? Yeah, sure. You need to speak the language. Of course, it's true that for the existing offices we have someone who is from Argentina but he speaks Spanish. And then you have the German officer who is a German guy who used to work here. What is really important is to master the direct sales approach first of all. Simply because that's what you will do for a couple of years, right? You're going to build a team, a sales machine that will be able to address the direct sales part. And then you have to be able to manage the rest as well. The indirect the customer success, so the existing customers. So step by step. So we're looking for a great leader that knows really well Odoo and that can really bring a lot of value to that specific market. That's the logic followed.

Olivier: 28:04

It's interesting because it's like every once in a while you get the emergence of a new hero going for the mission in the in each country. And that's cool. It's it's so much Odoo right?

Sébastien: 28:16

Yeah. Because the reality as well is that sometimes we send people that are really young. You know, I remember the director that we sent in Hong Kong actually, he was working in direct sales in Belgium, and the guy was actually in the company since 18 months, I think. And after 18 months we asked him, Hey, do you want to become the director of the Hong Kong office? And at that moment, I think the office was already an office of 20 people or maybe a bit more actually.

Olivier: 28:44

So it was a big challenge.

Sébastien: 28:45

It was a big challenge. He was probably 25 or 26 years old and he took over. And now today they are around like 200 people in the office managing a massive market. So yeah, it a bet but you know, we bet on smart people with the right skills and when you have the right skills the rest you can just learn. And that's basically the bet that we take. And most of the time it works really well.

Olivier: 29:08

Very interesting approach. Okay, so we are reaching the end of this episode. So I don't know if you have maybe some personal things you would like to share about you with us. So people listenned to you for 30 minutes. What could they know about you? Is there something personal you'd like to share?

Sébastien: 29:26

You know, nothing special. I think that, you know, I don't have anything special to share. Maybe, you know, I'm simply in charge of something that I really like, which is the evolution of this company. The funny thing is, the professional part becomes also your private part, right? I have three kids, right? And my son is always drawing a lot of things on papers. And most of the time he was drawing cars with the 'Odoo" on it. And I think that, you know, he's starting to learn how to write now.

Olivier: 30:03

The branding is working really well.

Sébastien: 30:05

And he's really fan of the trucks and of the cars, etc. So I think that, you know, life is becoming sometimes really, really based on Odoo. And it's funny. It's funny.

Olivier: 30:16

We can feel that you like it and that you really enjoy what you're doing. So I guess it can be a good example for people. I mean, having a job that you like that much and it's normal that of course there is a bit of blending in your life because you get invested into it, right?

Sébastien: 30:30

Yeah, indeed. Yeah. And you know, at the end of the day, the beauty of a company of Odoo is that it's like working in a different company every year because simply things are evolving that fast.

Olivier: 30:39

You know, I totally agree.

Sébastien: 30:40

Yeah. I mean, and I think it's true in every single department when you're growing at something like 60, 70% for the past ten years, you cannot expect to have the same company and look at where we are. I mean, we have internal studios, ..It's crazy if you think about where we were ten years ago, we were really a small company in the middle of the farm, because at that moment it was still mainly the farm, and now, yeah, it's growing fast and it's really nice to see how great people can really build a strong a strong company like Odoo.

Olivier: 31:15

Very good answer. Okay, So well that's it for our episode. Thank you for your answers was very interesting. So that's a wrap for this episode. Thank you for joining us today. If you liked it, make sure to support us by hitting the subscribe button, leaving a review or sharing the show. See you next time. Cheers.