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Webinar2 of 3 in a series: How Pricing and Licensing Helps Monetize SaaS Offering
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Transcript of Webinar2 of 3 in a series: How Pricing and Licensing Helps Monetize SaaS Offering
Making the Most (Money) with Your SaaS Offering
Webinar Series
Webinar # 2
How Pricing and Licensing Can Help Monetize a SaaS Offering
How Pricing and Licensing Can Help
Monetize a SaaS Offering
Jim Geisman
Principal/Founder
Software Pricing Partners
2© 2011 Flexera Software, Inc. | Company Confidential
Bashyam Anant
Director, Product Management
Flexera Software
© Software Pricing Partners, Inc
All Rights Reserved- 3 -
The Story Line
Overall pricing model affects SaaS success Affects key revenue metrics
Revenue leaks often due to lack of attention Leaks interfere with SaaS monetization
Where to focus effort Some elements more important
License metric and packaging are fundamental
Topics Pricing model is more than price levels
Selecting and assessing license metric
Packaging traps to avoid
© Software Pricing Partners, Inc
All Rights Reserved- 4 -
Topics
Pricing Model and Monetization
Choose Value Metric Carefully
Avoid Packaging Traps
Conclusions
© Software Pricing Partners, Inc
All Rights Reserved- 5 -
Pricing Model and Monetization
Pricing Model Affects Revenues
Pricing Model
Licensing
Structure
Pricing
Details
Transaction
Structure
© Software Pricing Partners, Inc
All Rights Reserved- 6 -
Pricing Model and Monetization
Pricing Model Affects Revenues
Pricing Model
License
Model
Value
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
© Software Pricing Partners, Inc
All Rights Reserved- 7 -
Pricing Model and Monetization
Pricing Model Affects Revenues
Upgrade
Rate
Order
Size
Viral Unit
Growth Rate
Customer
Growth Rate
Retention
Rate
Pricing Model
License
Model
Value
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
© Software Pricing Partners, Inc
All Rights Reserved- 8 -
Pricing Model and Monetization
Potential Revenue Leaks
Initial Revenue Stream Units licensed
Amount invoiced
Product mix
Downstream Revenue Repeat purchases, timing
Churn
Upgrades
© Software Pricing Partners, Inc
All Rights Reserved- 9 -
Pricing Model and Monetization
Pricing Model Profile
Pricing
Details
Licensing
Structure
Transaction
Structure
License
ModelValue
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
© Software Pricing Partners, Inc
All Rights Reserved- 10 -
License
ModelValue
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
Pricing Model and Monetization
Early Stage SaaS Company
Pricing
Details
Licensing
Structure
Transaction
Structure
Poll QuestionDo you use a tiered-pricing approach based on available packages,
value metric or license model for your products?
11 © 2011 Flexera Software, Inc. | Company Confidential
© Software Pricing Partners, Inc
All Rights Reserved- 12 -
Topics
Pricing Model and Monetization
Choose Value Metric Carefully
Avoid Packaging Traps
Conclusions
© Software Pricing Partners, Inc
All Rights Reserved- 13 -
Choose Value Metric Carefully
Align Metric with Value
Heroku
Dynos
Workers
© Software Pricing Partners, Inc
All Rights Reserved- 14 -
Choose Value Metric Carefully
Correct Metric Scales with Value
Connector Classes• Small Business
• Standard
• Enterprise
© Software Pricing Partners, Inc
All Rights Reserved- 15 -
Choose Value Metric Carefully
Just Because Everyone Does It…
Follow your customers not your competitors (usually)
© Software Pricing Partners, Inc
All Rights Reserved- 16 -
Choose Value Metric Carefully
Examples
CRM per sales rep RightNow
Developer tools per person CogHead / SAP
Stock trading per trade/share Archipelago
Credit processing % of transaction Verisign
Survey per survey Zoomerang
Check scanning per check Kodak
Network management per device OpenView
Insurance per policy Allenbrook
SW asset management % of revenue Flexera
Bandwidth/data transfer per GB ISP’s
Direct mail mail list size ConstantContact
Per user
Transaction
Usage/
capacity
© Software Pricing Partners, Inc
All Rights Reserved- 17 -
Value Metric
Testing for Value Scalability
Do customers pay more when getting more value?
Example (Company 1 vs. Company 2) Same total users, same email volume and
storage• Many vs. few partners
• Many vs. few “big” partners
© Software Pricing Partners, Inc
All Rights Reserved- 18 -
Value Metric
Testing for Value Scalability
Do customers pay more when getting more value?
Example (Company 1 vs. Company 2) Same number of users
• More vs. less time in video chat
Same minutes of video chat• Many vs. few users
© Software Pricing Partners, Inc
All Rights Reserved- 19 -
Value Metric
Ensure Metric Scales with Value
Metric should relate to value delivered Must be trackable
Metrics not always obvious Competing choices
May need surrogate
Test if metric scales with value Two scenarios
More vs. less of an attribute
Would “more” scenario pay more?
Attribute (examples)• Size (of company, group, user pool)
• Individual skill, usage
• Use or “consumption” of metric
• Revenue generation
• Cost savings
© Software Pricing Partners, Inc
All Rights Reserved- 20 -
Topics
Pricing Model and Monetization
Choose Value Metric Carefully
Avoid Packaging Traps
Conclusions
© Software Pricing Partners, Inc
All Rights Reserved- 21 -
Avoid Packaging Traps
Limited Upsell Path
Tokbox
Poll QuestionWhat is your estimate of revenues you are leaving on the table because
of “one size fits all” pricing?
22 © 2011 Flexera Software, Inc. | Company Confidential
© Software Pricing Partners, Inc
All Rights Reserved- 23 -
Avoid Packaging Traps
Complexity
Heroku
© Software Pricing Partners, Inc
All Rights Reserved- 24 -
Avoid Packaging Traps
Unclear Differences
Less Accounting
© Software Pricing Partners, Inc
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Avoid Packaging Traps
Steps Must Be Logical and Clear
Marketing Bridge4-fold User step,
2-fold Storage
step?
15 to 38 Team
Hours?
Why 750 to
3,000?
© Software Pricing Partners, Inc
All Rights Reserved- 26 -
Topics
Pricing Model and Monetization
Choose Value Metric Carefully
Avoid Packaging Traps
Conclusions
© Software Pricing Partners, Inc
All Rights Reserved- 27 -
Conclusion
Pricing Model Affects Monetization
Upgrade
Rate
Order
Size
Viral Unit
Growth Rate
Customer
Growth Rate
Retention
Rate
Pricing Model
License
Model
Value
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
© Software Pricing Partners, Inc
All Rights Reserved- 28 -
Pricing
Details
Licensing
Structure
Transaction
Structure
License
ModelValue
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
What Lies Ahead
Early Stage SaaS Company
© Software Pricing Partners, Inc
All Rights Reserved- 29 -
Pricing
Details
Licensing
Structure
Transaction
Structure
License
ModelValue
Metric
Available
Packages
Discount
Schedules
List
Prices
Deal
Pricing
What Lies Ahead
Established SaaS Company Profile
© Software Pricing Partners, Inc
All Rights Reserved- 30 -
Conclusion
Pricing Model + Back Office = $$$
Order
Entry
Fulfill
Invoice
Deliverables
Financials
Entitlement
Pricing
Model
Poll QuestionIf you offer tiered pricing for your SaaS offerings, which approach best
describes how you keep track of customer entitlements?
31 © 2011 Flexera Software, Inc. | Company Confidential
Q & A
32© 2011 Flexera Software, Inc. | Company Confidential
Making the Most (Money) with Your SaaS
Offering Webinar Series
Webinar #3:
Subscription and Entitlement Management Best
Practices for Your SaaS Offerings
33© 2010 Flexera Software, Inc. | Company Confidential
SoftSummit offers a comprehensive look at the
entire software and device product lifecycle—
providing you with strategies and the know-how
to adapt your business to thrive in today’s fast-
changing market.
Marriott San Jose ● October 24-26, 2011
Thanks for Attending the “How Pricing and Licensing
Can Help Monetize a SaaS Offering” Webinar…
35© 2011 Flexera Software, Inc. | Company Confidential
Jim Geisman
Principal/Founder
Software Pricing Partners
508-647-0330
Bashyam Anant
Director, Product Management
Flexera Software
408-642-3912