March 31, 2005, 12:00 AM

Hosted service lowering entry cost for analytics--but watch those add-ons

Pricing formulas for web analytics have become increasingly complex at some vendors. Noting complaints among end-users who seek a simpler price structure, Forrester analyst Bob Chatham anticipates more rationalized analytics pricing this year.

Hosted service at a monthly cost versus the upfront cost of installed software has lowered the cost of entry for many retailers that want to add or improve on their web analytics capacity, but in the view of some analysts, some of that cost difference between the two models may be evening out.

In what has become a hotly competitive web analytics market, in terms of pricing “There was a race to the bottom for the basic CPM model,” Forrester analyst Bob Chatham tells Internet Retailer. “Now that has faded, and people are getting pecked to death by ducks with the add-ons, like $1,000 for this particular query, or $1,000 a month for this Excel add-on.”

Under pricing formulas for web analytics that have grown increasingly complex at some vendors, the cost of ownership of web analytic software may actually be starting to merge with the ASP model, Chatham suggests. “The only difference is the fact that you have the software on your machines, on your site,” he adds.

Noting that he’s aware of much end-user “grumbling” about web analytics pricing formulas, Chatham believes vendors will respond. “This year you will bee some rationalization of pricing algorithms. People want something simpler," he says. “They are going to want to know what they are going to have to pay over the next 12 to 24 months, in advance.”

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