I’m pretty sure that this is going to be a fairly controversial post. However I think it is worth to write it. At least the essence of a blog is to be as transparent as possible. So here we go…

One of the things several prospective customers ask our sales team is: “What if one month we don’t need to send e-mail with your product? Will we still be charged the monthly fee?” People asking this, almost always refer to August or the holiday month of their choosing, where they are not going to send any e-mail at all.

We at Krasis offer two ways to purchase our hosted service: monthly fee or Pay-as-you-go.

In the first case (monthly fee) you know approximately how many e-mails your company is going to send each month, so you choose one e-mail interval (eg.: 5.000 mails/month) and pay a fixed fee that lets you send each month as many e-mails as the maximum indicated. Additionaly if you purchase a whole year (12 months) in advance you get one month for free (so you don’t have to worry about not sending anything on holidays). You can change the interval contracted at any time or even punctually for just one or two months for extra needs, and only get charged for the difference. Not used e-mail credit is not accumulated for the next month, so you must choose the right interval to fit your needs.

In the Pay-as-you-go model (available only for 10.000 e-mails/month or higher), you only pay for exactly the e-mail quantity you have sent the previous month. If you send, for example, 38.137 e-mails, you get charged exactly for this volume. However, as your company is not assuring us any predictable income, the cost per e-mail is slightly higher, but you have total freedom for sending any volume of e-mails you need each month. If one month you don’t send any e-mail you get charged nothing.

So, these options will fit almost any needs you may have regarding e-mail volume planning.

But one question remains implicit in this entire pricing model. One that many customers want to know: Why your price refers always to month?

Well the answer is quite obvious for the main part, although there are a few subtleties that I think it’s important to highlight.

Obviously our main cost items are always supported in a monthly basis: salaries, data center fees, bandwidth, supplies, electricity and many more. This is a common to the majority of services companies. And all of this must be reflected in some way in our incomes, so it’s quite obvious why the price structure of every provider of hosted software in the market is defined in this way.

The not-so-obvious issues regarding this monthly price model are the secondary services around e-mailing that some customers don’t take into account when they think “this month I’m not going to send e-mail”.

E-mailing is not only about sending e-mail in bulk. There are a lot of other things related that are very important too. For example all the statistics related to the mailings. Although one month you don’t send any single email, if you have sent a lot of them previously, that month the infrastructure still needs to be on-line and working in order to keep receiving all the reading and click stats, serving RSS and RSS stats, serving images and contents, and other related services. Aditionally, of course, although you don’t send e-mail, you can be preparing new campaigns or have questions about e-mail marketing that our support services will be answering too in that period.

So in these cases we still are working for our customers, even if they are paying nothing to us.

This doesn’t happen in other kind of services, although the thing is essentially the same.

A good example will be your fixed phone line monthly fee. Although one month you don’t make any single call you still get charged by the phone company. In fact it's correct as long as they are providing you with a service (the line and the possibility of receiving and making calls) although you don't use it. So almost everyone feels it’s fair to get charged for this. In hosted services like email, this should be true too, don't you think? :-)

Another day I’ll comment on the way the sending of a high volume of e-mails in a short period impact the cost model of a hosted solution in a quite technical way. I think everyone using this kind of services should know well.