Question

Topic: SEO/SEM

Product Obsolescence

Posted by Anonymous on 7/2/2008 at 4:54 PM ET 500 Points
Developing a NextGen platform that will replace but not be compatible with three existing platforms. Planning on a one year transition period which will include a promotional discount on the new platform. Looking for guidance on average % of promotional discount, and how to allocate it based on: 1) customer status (new/existing), 2) customer loyalty (how many units of the existing platforms do they currently own), and 3) age of equipment (how old are the units owned by exiting customers). Please feel free to add additional criteria that need to be considered, and comment on pricing of the existing paltforms during the transition period.
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RESPONSES

  • Posted by Jay Hamilton-Roth on 7/2/2008 at 6:17 PM Accepted
    I'm assuming your new release will make your 3 other offerings obsolete. If so, another way to handle this is to ramp up the support charges for the obsoleted versions.

    Unless your other 3 products will stop working within the year, realize that many of your existing clients will simply stick with the "devil they know" instead of the "devil they don't". Just because you say the newer is better doesn't mean it'll work for them. You have to show them that there's an order of magnitude improvement in their results (or new features they've been clamoring for) to get them to switch, otherwise the risk may too high.

    If your new release will make your own support overhead much reduced, then consider if you give the new version away to your existing clients, you'll be making money (assuming that the support headaches will exceed development costs).

    What I've seen that's worked well is offering a phased discount. If a client has purchased the product in the last few months, they get a free upgrade. If they purchased in the last year, a big discount. If they purchased 5 years ago (for example), then a mild discount.
  • Posted by excellira on 7/3/2008 at 12:09 PM Member
    Would it be advantageous to utilize the software model of ceasing support for the legacy product at a given date while providing an incentive to upgrade to the latest version?

    Newer versions would receive greater discounts.

    Thoughts?

    Regards,

    Greg Hill
    Trinity Search Engine Marketing
  • Posted on 7/7/2008 at 1:01 PM Author
    Thank you for your responses. They were all very helpful. Was already thinking along the lines of offering bigger discounts for customers that purchased their platforms recently, since they will feel the greatest pain. The idea of having the discount also depend on when they order within the transition period was new and makes a lot of sense.

    The transition plan calls for no new enhancements on existing platforms starting end of this year. New unit sales of existing platforms would stop one year after the new platfrom is rolled out, but spares and repairs would continue. Spares sales would stop 1 year later, and repairs would cease 2 years later (formally obsolete product).
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