I joined IndexTools in 2007 as a Professional Services Consultant.  IndexTools was a mid-tier web analytics tool which was not free.  We often said that we had 80% of Omniture’s technology for a fraction of the price and merrily plied our trade across the world.  We were then acquired by Yahoo! in May of 2008 and became Yahoo! Web Analytics (after a brief stint as IndexTools, a Yahoo! Service).
At the time of the acquisition, charging for the web analytics tool was instantly discontinued.  The reaction to this particular change surprised us.  There were no immediate alterations to the tool but we discovered that people were worried by the price point.  We had (naively, perhaps) expected customers to be quite excited at the sudden cut in their costs, especially given the looming down-turn in the global economy, but instead we found that many were cynical and distrustful and immediately assumed that the tool was of a lower quality than previously.
Bear in mind that at this point, we had made no major changes.

As time went on, we soon found (and this is something that got us where it hurts – our pride) that we were compared to other tools purely based on price point.  You will rarely see comparisons between paid tools based on price alone – they will mention the power of the tool, the many types of reports, the flexibility, and so on.  Seldom will you see a comparison between Tool X and Tool Y because they both cost $1000.

We suddenly found ourselves in the same buyer’s basket as any free analytics tool.  In the same basket as plug-ins, as hit counters!
Yes, I exaggerate…but only slightly.

It is generally accepted that you get what you pay for – while we were compared in various blog posts and reports with Coremetrics, Webtrends etc when we charged for our tool, the moment we went free, even though the tool was the same, a surprising number of people ceased to see us as viable competition in the web analytics market.  It was really quite hurtful.


The Princess Perception

A price tag of $0 can affect the perceived value and therefore importance in a company’s suite of tools.
I like to call this The Princess Perception – the same rule applies with dresses and shoes and perfume etc (if you’re a girl, that is).  As the price increases, the perception of quality increases.  The uses to which you will put that which you buy tend to be tied to the price paid.  If you buy a cheap dress, it’s for wearing in the house where no-one can see you – you may eventually take to dusting the TV with it as you pass. If you spend a lot of money on a dress, you’re going to an event where there will be lots of photos taken – you will spend lots of money on accessories to enhance that original purchase (if boys are losing me in the girly analogy, I’m talking about employing analysts).
There’s a minimum price expected – anywhere between minimum and free, the perception is pretty much the same.  After the minimum price, the quality perception grows.
As I said before, this is not a new phenomenon, but it’s new to us and increasingly relevant now that there are more free web analytics tools in the market – tools that are of a relatively high quality and suitable for anything from my mother’s blog to huge sites.

Let’s face it – there’s no such thing as “free”.  It is naive to believe otherwise. Philanthropy is a wonderful thing, but I’m not sure how much of it you will find in the web analytics industry. Instead of paying money for a free tool, you simply pay with a different currency, and that currency is data.  If you use Google Analytics or Yahoo! Web Analytics, you are in effect still paying – just not with cash.
So, if none of the tools in the market are really free, and we accept that, shouldn’t perceptions change?  If you’re paying in one way or another, then comparisons on price alone are heading towards meaningless.  We should compare on other factors – the first being “Will this tool do what I need it to do and help me to gain actionable insights?”

A tool just vomits data – you have to have people to interpret it. That’s where your cash should go – it doesn’t HAVE to go into a web analytics tool.