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Pricing Trends in the Web Conferencing Market

Pricing pressures continue to intensify in the Web conferencing market, especially as Microsoft offers collaboration products at cutthroat rates (indeed, for many enterprise-license users, they are effectively free--if you don't count implementation and maintenance costs). Prices for Web conferencing services continue to decline as the technology hits early stage mainstream adoption. Vendors are offering deeper discounts as they get into larger enterprise deals, bringing the average selling prices down by 10 percent to15 percent annually.

Vendors are addressing the market with a wide range of pricing models, but as the market matures, buyers are moving to named-user pricing. Based on research done by my colleague Roopam Jain, Frost & Sullivan estimates that more than 75 percent of revenues for Web conferencing services come from named-user licenses. The research is available to clients at

Several vendors are creating bundled suites of collaboration services that combine web conferencing with email, messaging and groupware at a single low price. That makes it tough to estimate revenues and average selling prices for Web conferencing. For instance, Cisco WebEx bundles its suite of Web conferencing services under Enterprise Edition and as part of CUWL licensing. Microsoft is offering Web conferencing under BPOS, and IBM as part of LotusLive.

Thanks in part to pressure from Google Apps, and in part to a desire to "own" the UC&C market, Microsoft continues to push a "high volume at lower prices" strategy to saturate the market. BPOS is now available to users at a list price $10 per month, down from $15 last year. That aggressive pricing is putting further downward pressure on prices on services from other providers: IBM has announced a LotusLive bundle of e-mail and social networking tools for $7 per month. The bundle wraps together the capabilities of the LotusLive iNotes Web-mail, messaging and calendar offering, and LotusLive Connections.

* Prices for the top-five vendors are higher than those offered by smaller providers, which price their solutions at 15 percent to 20 percent below "tier 1" solutions. (For instance, vendors like Dimdim offer Web conferencing for a third of the prices charged by leading brands.)

* Pricing in Europe has traditionally been higher than in both North America and APAC. But the traditional difference between Europe and North American prices is narrowing as several European vendors adopt more aggressive pricing.

* In certain vertical industries, specific pricing models are best suited to the use case. Full Time Enrollment or Open Access Licensing is the dominant model for education users, and prices vary significantly based on the size of the university, class, and so on. Several vendors are also offering room-based pricing for large events and for the webcasting market, where pricing is primarily done on a per-event basis.