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Pricing Process and GM’s Software Recall

Published: July 7, 2014 | By Chris Mele |

How To Properly Plan Software Updates

General Motors recently recalled 474,000 vehicles, many of which are being returned to dealers so they can “recalibrate the software”.

Think about it: 474,000 customers had their daily activities disrupted by a software problem. I wonder if GM factored the reputational cost of a recall into their pricing process.

Now think about what can happen to your customers when you update your SaaS or mobile application. Updates are commonplace for software companies — they do it all the time — and the results are mostly positive changes to the customer experience.

But even when updates are thoroughly tested, sometimes customers find the change is not for the better. There are two changes that many customers find unwelcome: Changes to the user interface and changes to functionality. 

Even when software updates are thoroughly tested, sometimes customers find the change is not for the better

The Importance Of User Interface Changes

Since we’re all creatures of habit, we resist changes to the obvious ways in which we interact with a product. Major changes to screen layout, menu choices, hotkeys and shortcuts can cause grief. As an example, although there were attractive changes to the iOS 7.1 user interface, they took getting used to — like the new “Settings” icon.

Changes to your application’s user interface should be done with great care and should be consistent with one principal of elegant design: less is more. This article from MIT’s Sloan Management Review is good advice.

While the value of an elegant user interface is hard to quantify as part of the pricing process, it is an important consideration. Customers tend to reward attractive user interfaces that are easy to understand and easy to navigate.

Changes In Functionality

There is a great temptation to add more functionality to existing applications. There are two reasons to avoid this temptation. 

  1. More functionality can result in less useful applications because customers may not want the added functionality or may find accessing the functionality confusing.
  2. Applications are often part of business processes by the way people use the application or via APIs. Now the changes in functionality can create real headaches when business processes need to be revised. These unintended consequences can result in upset customers and contribute to dissatisfaction which may result in customer churn.

What To Do If You Are Planning To Change Functionality

If you are planning to change functionality, consider making the new functionality an optional add-on or part of a different package. This effectively insulates your customers from undesirable changes. The best way to do this is by ensuring your product roadmap is part of an Offering Model and part of the pricing process. Having a framework for making decisions about features and packaging will bring discipline and order to your updates.

Remember, your License Model and Offering Model should always come first in your pricing process — before you start mucking around with your pricing or website’s pricing pages.

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Chris Mele

About The Author Chris Mele

Chris is Managing Partner for Software Pricing Partners, where he and his team have launched some of the software industry’s most transformative monetization strategies. As a former software company founder and leader, Chris focuses on the impact effective licensing, packaging and pricing strategies can make on the most essential software company metrics: revenue, profit and valuation. Under his leadership, Software Pricing Partners has become an influential voice for growth-oriented software companies both large and small.


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