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+ n.b. I get phone calls from people whose budget is $9 a month (me: "Oh cripes, not again.")

When I have a $9/month budget, I would rather know up front (from the web page) that the reaction on the other end will be "Oh cripes, not again." The "call me for a quote" is a very strong signal that I need not bother to call, and I generally don't. It's the old adage "if you have to ask, you cannot afford it."

On the other hand, the OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.

<i>OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.</i>

There might be, but I wouldn't bet that way. There's a relatively small window of company size between the point when someone needs a payroll service (10+ employees?) and the point where it makes sense to speak with a person about what bits and bobs a payroll provider should include and negotiate a price for those services (maybe 200+ employees).

I'd guess that's the size of a significant fraction of Y Combinator companies, but I'm not sure how well that would hold up across all industries.

Well.. don't forget, the distribution of corporations by size isn't even nor is it linear – it's exponential. From small business data taken from: http://www.census.gov/econ/susb/ – 98.7% of all US firms have fewer than 500 employees. 36.6% have between 5 and 100 employees.

To approximate the range you gave, 20.6% of all US firms fall between 10 and 500 employees (The bins in the data don't match your range perfectly) – so it'd be reasonable to guess that ~14% of all US firms are between 10 and 200 people.

That's a fairly attractive market – especially considering that if you made it easy enough, you'd draw in more of the smaller companies (say 5-20 employees) and they represent an even bigger slice (~74.5% of all US firms).

So yeah, I think it's significant as a target market.

> between 10 and 200 people. That's a fairly attractive market

That's crazy. There's not near enough granularity to infer anything about the attractiveness of the market. A firm with 10 people is probably not paying a payroll company; a firm with 200 people almost certainly is.

> A firm with 10 people is probably not paying a payroll company

Sounds like an opportunity. If you have 10 people, at least one of them is probably spending their valuable time on payroll; if you had an affordable self-service option that undercut the existing providers, maybe they would pay a payroll company. And the firm with 200 people, maybe you could undercut their payroll company as well.

If you looked at the data, you'd see the granularity you desire. I was summarizing, but it's all there for you to poke at if you'd like to.

Also, given the number of companies that have 10 employees vs. 200 employees, if you could figure out how to make those 10 employee companies outsource their payroll, you'd have a decided opportunity (and that was also my point and it's exactly the point that philwelch makes here).

The fact that you and everyone else assumes that a firm with 10 people makes it to small to sell to makes it an opportunity for innovation. A well-done web-based setup rather than the higher cost, high-priced sales person/pitch could easily bring down the costs to make it a more economical proposition to serve the (presumably) lower-margin but higher aggregate volume small business segment.

>"OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service."

mmmhmm.

See also: Dwolla, PayPal Here, Square POS.

POS software sucks.

If you have a $9/mo budget, you should already know that the reaction on the other end will be "Oh cripes, not again". $9/mo is $108/year, which really isn't much considering dev, support, infrastructure, non-tech staff, and overheads.

If you want interested, keen support, then do what is necessary: pull out your wallet and stop going for the cheapest thing possible.

One honest reason why some companies do 'please call' is that pricing structures can get complicated quickly, the intracacies of which may be necessary but may confuse the purchaser. I've just come out of a meeting where it's clear we're going to have to take a financial hit simply to allow our reselling agents an easier price structure to quote from (these agents aren't primarily technical staff).

On the other hand, the OP is indicating there is an underserved marketplace that may be ready for disruption by a low cost no frills service.

Friendly, keen support is a frill.

I wouldn't consider the payroll software business ripe for disruption. A few major vendors have been doing it with transparent pricing and no sales-rep interaction for years. The other thing is that payroll is not exactly an easy system with all of the complicated tax laws, forms, communicating with banks for direct deposit, etc.

You're unwilling to make a phone call because you find payroll services pretty boring. But nonetheless it is entirely possible you've found the thing the whole industry is missing.

On the contraty, I assume they're good at their jobs, and therefore way better at negotiation than me, and therefore whatever price they come up with will extract nearly all the consumer surplus.

The counterargument is that the sales process may not be optimized for total revenue. It may be optimized for commissions. And, the people controlling the entire sales process, including online marketing, are the sales department. I only have anecdotal experience with this, but enough so that I think it's a contributing factor.

> The counterargument is that the sales process may not be optimized for total revenue. It may be optimized for commissions.

In theory, companies' commission plans are supposed to be optimized for total profit (vice revenue). That's really hard to do.

Not the least of the reasons for this is that the people who work on commission can be quite creative in maximizing their personal goals, such as commissions, 100-percent-club junkets, etc.

As you imply, there are segments in every market. Of course there is a segment of companies with hundreds or even thousands of employees with gigantic budgets. These guys are going to do RFP's and spend months evaluating the different payroll providers.

Then there is the segment of small guys lik me who have under 10 employees who frankly don't need anything too complicated. You can say "I am only going to serve large enterprise customers through a complex sales process" and that's completely fine with me. But don't pretend to cater to my segment if you are not to adapt your model.

> They've devoted their careers

Since payroll is not some hip, new, web 2.0 kind of thing, it's always possible that they do it way "'cause that's the way we've always done it", too.

Sounds like a perfect opportunity for someone to come along and 'fix' this. :)

My bet is that self-server option has a higher per-transation yield, but the over-the-phone option has a higher closing rate.

In fact, I worked with a company that had both options implemented, and pretty much all inbound sales calls resulted in sales. If people are calling, then they are usually ready to buy - from you or from someone else. A good sales person will make sure it's you.

Yes, well I'm sure if you only provided sales through a specialised fax number, virtually every fax would be solid sales enquiry.

You might only get one fax a month, of course.

Signing up online is more efficient than picking up the phone. This alone seems like enough to guarantee that it is only a matter of time before everybody in the industry offers online self-service, excepting those who do not need or want new customers.

You'd think. But you can get much greater differences in pricing if you find out who you're talking to before you give them a price. That's really hard to do with online self-signup.

The payroll companies that I have dealt with have always been efficient and competitive in their pricing and level of service. And this is a mature industry with competition and multiple providers. The amount of disruption possible is probably nominal.

That's a fantastic reason to be leery of vendors want to do business that way. If I can see their offering described on materials posted in public, I can be much more confident I'm being treated fairly by them.

What the hell difference does it make who they're talking to? What matters is what they can provide and under what terms.

Not really. Pricing gets complicated for enterprise sales so it can't be as simple as just signing up online. Furthermore, if it's a trial they are signing up for then they have to be put into the sales funnel (meaning they have to sift through a bunch of tirekickers to find the real buyers). Finally you'd have to worry about fraud, trial abuse and all of the other related pains of free and open signups.

There's a reason that basically every business in the industry does it this way.