Editorial
Pricing is a contentious subject in the digital asset management (DAM) world, but it's a topic of near universal interest for anyone involved in the field.
A few recent reports about the DAM industry appear to be trying to outdo each other in their projections for future revenue — and have raised questions about their accuracy along the way.
DAM News conducted a DAM vendor pricing survey as an attempt to get some real data about the fees involved in DAM implementations, both for the benefit of anyone intending to purchase a DAM solution but also so vendors could benchmark themselves against their peers and make some informed decisions about this issue, rather than relying on conjecture and gut feelings.
We entered the survey with a few ideas on what trends might emerge based on previous product pricing information and our past experience as a DAM solution provider (a pursuit we left many years ago). Comparing DAM solutions causes confusion and bewilderment for DAM end users, and stress for all parties involved in making the purchasing decision.
The survey confirmed our expectations on many fronts, but some trends emerged which were more pronounced than expected. Further, in addition to the factual information, some revealing insight into the DAM market was yielded simply by asking vendors to participate.
DAM Survey Participants and Methodology
All of the vendors with registered profiles at damvendors.com (86 at the time) were invited to participate in the survey. Of these, 34 agreed to participate and 16 actually completed the survey. The companies who completed the survey were: Asset Bank, Brandfolder, Brandworkz, Daminion, Digital Collections, Digizuite, Freestyle Partners, hyper Content & Digital Asset Management Server, Marvia, Meriworks, MerlinOne, NetX, Nuxeo, Picturepark, Third Light and Widen.
None of those listed above either paid to appear in the survey nor received payment. The pricing details provided are anonymous using numbers to represent each vendor. We made this point clear to vendors before they completed the survey, as such, there was no marketing benefit to providing prices that were lower or higher than the ones they would normally charge and none of the firms concerned revealed anything that was directly attributable to them.
This factor appears to have been lost on a number of companies who declined the invitation to complete the survey, but more on that later.
The range of vendors involved covers a reasonable selection of the market: from providers who specialize in low-cost solutions, SaaS/Cloud DAM, on-premises through to enterprise. In addition, some firms have a very high profile, while others are less well known.
While a larger sample would have been ideal, it does reflect the diversity of the market in terms of size and range of products on offer.
To derive the survey questions, we originally tried to create a list of common characteristics that might accompany a typical implementation, including items like consultancy and training services as well as whether the vendor allowed the product to be licensed separately, storage costs, etc.
This proved to be unworkable. There was a huge range of interpretations about what was meant by each and some vendors who considered them integral, while others who believed they did not apply.
Based on feedback from a few vendors consulted while preparing the survey, we chose instead to use four pricing scenarios: Graphics Studio, Department DAM, Medium Size Company and Enterprise DAM with a specified number of users and storage/bandwidth limits (for hosted products).
We further broke the user types down into administrator, upload/edit and read-only users which covered the majority of broad user type classifications. We also asked for each vendor's 'average' or typical implementation. The first year and second year costs are intended to provide an opportunity to analyze the differential between the initial setup and ongoing use (the latter figure generally being lower than the former for most DAM implementations).
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A Range of DAM Responses
A few key themes emerged:
- There is what can only be described as 'fear' across significant sections of the DAM industry about revealing prices and a lack of willingness to be transparent about pricing. Not all vendors are afflicted by this, but many are. Even among those who provided figures for our study there was still some initial reluctance from a few
- Of the vendors who did not participate — apart from concerns about the survey process — there was an eagerness to divorce price from value, i.e. wanting end users to consider the value delivered and not the expense of their product. Whether this is a legitimate justification to not offer pricing information is open to debate
- A wide range of interpretations came to light about the additional services aspect of DAM implementation. These can have statistically significant impacts on the end price DAM users pay
- The distribution studies analyzing pricing across different price brackets covers a huge range: all scenarios exhibited thousands of percentage points differentials between the lowest and highest priced providers
- The average price group (i.e. what each vendor who participated regards as typical for most of the clients they currently work with) is higher on the non-hosted side, which suggests that the majority of larger enterprise DAM implementations are still on-premises
- On-premises costs tend to be higher in year one, but are proportionately lower in subsequent years (with the caveat that these on-costs take no account of expenses incurred by clients to maintain their own servers nor intangibles like slower deployments of upgrades, etc.)
Some select figures from the quantitative studies are as follows:
- The average cost for a hosted DAM solution in the first year is $37,846
- The average cost for a non-hosted DAM solution in year one is $71,930
- Second year fees for hosted vendor average systems are 77 percent of the first year's fees
- Second year fees for non-hosted vendor average systems are 43 percent of the first year's fees
- On average, DAM solutions have 850 read-only users, 101 upload/edit users and nine administrators
- The average storage allocation for hosted solution is approximately 1.5TB
- The average data transfer allocation for hosted solutions is 478GB
All of the above numbers come with the same warning: these are raw averages. The median, standard deviation and distribution studies indicate different figures (i.e. a statistical divergence) which suggest that the market is highly diffuse in terms of pricing.
Relying on the above numbers alone might be unwise for managers planning DAM implementation budgets. In particular, the service aspect of DAM delivery is very important to clarify both to ensure that pricing meets expectations and also that the assistance you receive is commensurate with what buyers are being asked to pay.
This is where the value element mentioned earlier comes to the fore. I would argue that pricing gives some context and a method to benchmark one provider against another. In other words, you cannot just sell benefits, you need to explain what prospects will have to hand over (in hard cash) in order to get them.
A Maturity Curve in the DAM Market
Conducting this survey gave the impression that while some DAM vendors are beginning to formalize their delivery processes in a way that enables them to offer clear and consistent pricing policies, far too much of the industry operates using models that resemble those used by marketing/design agencies or bespoke software development suppliers.
This would explain the reluctance among many to offer definitive numbers (also a prevalent factor in many of the responses to RFPs that I periodically review).
I suspect that much of the DAM software industry fears discussions about pricing because the vendors do not fully understand how much to charge prospective clients themselves — leaving their quotations across different target markets and clients in a continuous state of flux as a result. The pricing themes also echo other trends in DAM software, for example, where vendors obsess about copying features in competitor products in case they are disadvantaged when it comes to sales pitches.
These factors all give the impression that the DAM industry is quite a lot less mature than it believes it is. While the various 'maturity models' and other studies available might cover the functional side, they mask the high levels of commercial insecurity that characterize many DAM vendor's business processes and service delivery models.
You can read further survey results in the report.
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