By Linda Rosencrance

When it comes to Microsoft Dynamics CRM Online's Fall '13 update, the old adage, "you get what you pay for," seems to be an accurate assessment.

Analysts and partners agree that the Microsoft's new CRM Online release offers more functionality for the price than the CRM solutions of other vendors including its closest competitor, Salesforce.com.

But even though Dynamics CRM Online 2013 is giving customers more bang for their bucks, Microsoft probably should have done a better job telling those customers exactly how many additional bucks that extra bang was going to cost.

"Should Microsoft just have jumped the price without a whole lot of preparation? No," said Paul Greenberg, President of The 56 Group, LLC, a consulting firm focused on CRM. "Microsoft didn't really do a good job. It would have been in Microsoft's best interest to start preparing customers over time. Microsoft should not have just dropped the bomb. They should have informed people months ago that this was going to happen and babied it a little."

When Microsoft launched Dynamics CRM Online professional in 2008, it debuted at an introductory thirty nine dollar per person per month price point for the "professional" version.

"It was sort of the equivalent of a loss leader and a come on at the time - when Microsoft was just competing with Salesforce," says Greenberg. Although Microsoft claimed CRM Online was the same as Salesforce, Salesforce was actually more robust."

Then Microsoft raised the price of the CRM Online license to $44 in January 2009, where it remained until it rolled out Dynamics CRM Online 2013, when it increased the cost of the professional license to $65.

"The $44 was still an incredible price for the functionality people were getting and again really aggressive," Greenberg said. "It was basically an early adopter price. Microsoft would never have said that because that would indicate it was a new product."

Greenberg said since Bob Stutz, now corporate vice president, Microsoft Dynamics CRM, arrived at Microsoft from HP in 2012, he has shaken up the product strategy.

"He completely revamped the product; it's eons ahead of where it was," he said. "There are still some holes in it, but Dynamics CRM Online 2013 is substantially a better product than what Microsoft had on the table before - although it still doesn't improve customer service a great deal. You're getting more for the money and you're getting a much better and much more contemporary user interface. You're getting capabilities that businesses can use effectively and scale."

So for the current price of $65 for the professional license, customers are, in effect, getting a much better product, Greenberg said.

"Functionally it's as close as you're going to get to Enterprise at Salesforce, which costs a hundred and a quarter and you're still up against Oracle CRM On Demand, which is still ten dollars more," he said. "Yes, [Dynamics CRM Online] is more money but you don't buy things based on that price unless you're a small company that has to consider price as a first priority. You're buying on the basis of what you need."

Esteban Kolsky, Principal & Founder, ThinkJar LLC, agrees with Greenberg.

"You have to ask yourself if the new product still does what you need it to do," Kolsky said. "You also have to look at the new functionality and decide if you need any of that stuff. And you also have to ask yourself how happy you are with the whole concept. Do you like the vendor? Do you think they do a good job? Do you like the product? Is it flexible? Does the new interface work for you? If you're happy with what you have and if you're going to need the new functionality in the future, then it's a good deal. If not, then you have to look at the numbers. But looking at the numbers only without looking at why the numbers changed is wrong."

Greenberg said if what Microsoft is offering isn't worth $65 to companies, that means Oracle isn't worth it to those companies and Salesforce isn't worth it to them, either.

"Saying you'll get another vendor is silly," he said. "You should get another vendor if the capabilities that Microsoft is offering are no longer adequate or if you can't afford it. But if you're not a small business, you're going to have hard time finding anything. I don't think the price increase is any basis to drop Microsoft. In fact, you should really take a look at the good things you are getting for it. But at the same time, I don't think it was to Microsoft's benefit to just throw it at somebody, either. It doesn't help their visible public image. You just don't do that in the market. You just don't change it to the point of twenty-one dollars. That was not the best way to go."

But the real test of whether or not the price increase is going to be a shock to customers' systems is not to look at it prospectively but retrospectively, said Denis Pombriant, managing principal, Beagle Research.

"I think you need three to six months and then revisit the subject and more likely than not, you'll discover that the marketplace has taken the price increase in stride," he said.