Why is accounting software like a chocolate bar?

No, you generally don't wrap GL/AR/AP in foil and put it on a shelf near the checkout counter. But have you noticed what has gone on in the candy wars over the last few years?

Think about Reese's, which once simply marketed chocolate-covered peanut butter cups. Now there are many varieties of the old stand-by: White Chocolate, Big Cups, White Chocolate Big Cups, Inside Outs, Chocolate Lovers, along with Reese's Sticks, Fast Break, Cookies, Nutrageous, Pieces,. Bites, Low Sugar, and even a Carb power bar. Some of the peanut butter cups are limited editions, like Extra Smooth and Creamy, Chocolate Lovers, and Fudge. There are trees for Christmas and pumpkins for Halloween--all chocolate-covered peanut butter items. And if you've noticed, virtually any product that started out with a milk chocolate version, now comes in white chocolate.

That's product line extension in action. What it does is builds brand awareness--there may be a few feet of candy bars, all displaying the Reese's name, while squeezing out lesser competitors. (Since Reese's is owned by Hershey, there are not a lot of big competitors).

This has happened in the world of accounting software. Just ask any reseller who has been in the business more than 15 years about how many more titles they have from individual vendors. It's a phenomenon that's as true for the retail stores as for the VARs.

When QuickBooks was introduced, it was just QuickBooks. Now, the varying versions, along with vertical flavors of the product, stack up to what Intuit calls "The Sea of Green," at retail stores. That's from the predominantly green packaging. It has an impact similar to the largely orange scheme of Reese's products. This kind of shelf dominance has an impact on customers.

Product lines from Sage and Microsoft have similarly expanded. GL/AR/AP is now a series of products that require more personnel and attention, things which are opportunities for customers, but are also barriers to VARs branching out into more lines.

Another effect is the impact of product line expansion of pricing. Pricing of individual modules sometimes doesn't change, but the number of modules client purchase for must-have functionality does.

Most recently, Sage showed how this works when it decreased the list price of its MAS 500 Inventory Management Module for Version 7.0, but broke out the functionality of a separately priced Warehouse Management Module. The total cost, of course, is more. Moves like this lets vendors say, with a relatively straight face, that they haven't changed prices significantly.

This trend is unlikely to change in either candy or software.

Say, has anyone thought of chocolate-covered payroll?

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