Seems like a great product at great price - half the cost of a Starbucks latte per month.

Get 500 customers with 500 employees each that's $525,000 per month!

I agree with you, that this price wars come to the cost of good service which causes the (content pre-price-wars) customers to become disappointed customers that have a high potential to switch the provider. So on a long term, no good.
But, if you plan on doing these price-wars only for a "small" period of time. Say 5 years or so, just to get your company known to everyone and achieving a bigger customer crowd. This might actually work.
But you would have to consider the quality of your service. This should never fall beneath a certain standard.
But if you can achieve both low pricing and an at least acceptable support and/or service, you might boost your customer base.

Dirk thanks for the feedback and Torsten, good points. Would the challenge be raising prices at some point? After all, branding is branding and in the US, Volkswagen is known for making entry level cars. About six years back they invested over a billion dollars to bring a high-end luxury car to the US called the Phaeton.
The car was similar to the Audi A8 (Volkswagen owns Audi) and it failed because people didn’t want to spend $70k on an entry level brand. Ironically many of the components in the Phaeton ended up in Bentley’s cars (Cost $150k+) because people would spend that kind of money on a high-end brand.

My concerns also have to do with branding. Volkswagen makes great cars but is not considered a top brand. Price implies more than we realize. We are often blinded by matter-of-fact reasoning in the technology space and forget customer perceptions of our actions.

Yes, the challenge would definately be rising the prices at some point.
Your expample with Volkswagen is quite a good one. In Germany VW (Volkswagen) is both a entry level manufacturer, but also delivery high-end and very expensive cars. Although the Phaeton also seems to be a flop here in Germany as well. Although it has the same quality like an Audi A8, for example.
One example from Germany to underline that theory about brands is the "Deutsche Telekom" which is the by far biggest telecommunications provider in Germany. The Deutsche Telekom has moderate pricing and quite good support/service. But compared to the competition, they are higher in price and really better in service/support.
So, instead of lowering their prices, and going into quite soem risks with that, they just simply founded a daughter.
"Congstar" is now the "cheap-brand" of the Deutsche Telekom. Competing with its mother, but at much lower pricing. And they seem to go very good with this.

Bottom line, you are absolutely right about the meaning of brands and how people react to them. But just the same are the companys smart enough to circle these behaivours by selling their part to other manufacturers ( e.g. VW to Bentley and Audi) or they just simply found a daughter that most people don't know that it is a daughter and have their revenue this way

I agree 100%. Tech executives should all hire you to help them understand branding and how to position and price their products. Perception is not something the typical engineer understands as it is too intangible for them. If it is not a one or a zero it doesn’t seem to exist in the engineering world

As an engineer myself I feel comfortable making these statements btw and no offense intended.

Rich,

Thanks for the mention! A lot of people have asked about our pricing as a result of our recent release, and I just posted a blog entry on this very question (and about pricing in general. The entry specifically addresses how software approaches like Objectworld's are fundamentally reshaping the price of unified communications.

Cheers,
David