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Webinar2howpricingandlicensinghelpsmonetizesaasoffering 110701144722-phpapp02 Webinar2howpricingandlicensinghelpsmonetizesaasoffering 110701144722-phpapp02 Presentation Transcript

  • 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 Model Value Metric Available Packages Discount Schedules List Prices Deal Pricing
  • © Software Pricing Partners, Inc All Rights Reserved - 10 - License Model Value Metric Available Packages Discount Schedules List Prices Deal Pricing Pricing Model and Monetization Early Stage SaaS Company Pricing Details Licensing Structure Transaction Structure
  • Poll Question Do 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 Question What 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 All Rights Reserved - 25 - Avoid Packaging Traps Steps Must Be Logical and Clear Marketing Bridge 4-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 Model Value 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 Model Value 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 Question If 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 jimg@softwarepricing.com Bashyam Anant Director, Product Management Flexera Software 408-642-3912 banant@flexerasoftware.com