Undercutting one’s competitor on price is a time-honored business strategy, practiced by companies selling everything from milk to bread to oil to beer to software.

In the online CRM market, SugarCRM has been marketing against its chief target, market leader Salesforce.com, with a fury. The SugarCRM website guarantees that Salesforce.com customers will save 50% by switching to SugarCRM.

And indeed, in the range of features and number of users in which these systems are chiefly targeted, the Professional level, SugarCRM’s pricing is less than one-half that of Salesforce.com, at $30 per user per month vs. $65 per user per month.

As an example of “do unto others” or karmic poetic justice, we see that Salesforce.com’s original selling proposition was in undercutting traditional on-premises packaged solutions like Siebel’s by making CRM more affordable as a SaaS product.

SugarCRM markets its software as more flexible, open, and affordable—meaning less expensive and more customizable than Salesforce.com‘s. SugarCRM’s promotion of these messages has been aggressive and pervasive, with its “The Top 10 Reasons Salesforce.com Customers Switch to SugarCRM” infiltrating all corners of cyberspace.

CRM analysts generally agree that SugarCRM’s open source model gives it a compelling proposition in pricing and the involvement of a worldwide development community. For some users, SugarCRM’s open source nature is attractive, while to others being open source is seen as too murky and scary a risk.

Recognizing that price was a key factor in CRM decision making, Chris Bucholtz,s editor-in-chief of CRM Outsiders, conducted a CRM TCO study released in 2011 that examined all hidden costs and fees. Bucholtz’s study found that the cost of a 10-user Professional version of Saleforce.com was more than double that of a SugarCRM Professional version, at around $22,000 vs. $10,000, respectively.

The weak link in SugarCRM’s armor for small businesses is its 5-user minimum requirement, which makes its $360 per user per year license actually five times that amount, at $1,800, regardless of whether you have one or five users. This is a show stopper for many small shops. However, one way around this is through resellers like BrainSell, which say they can offer single-user licences of SugarCRM.

For some small businesses, SugarCRM and Salesforce.com may be a bit more complex and challenging than other products in this category to set up and customize.

Bottom Line: SugarCRM and Salesforce.com both have good reputations, full features sets, and are highly customizable. If price is your determining factor, SugarCRM is less expensive and worth consideration.

Source : business2community