Webinar2 of 3 in a series: How Pricing and Licensing Helps Monetize SaaS Offering

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  • 1. Making the Most (Money) with Your SaaS Offering Webinar Series Webinar # 2 How Pricing and Licensing Can Help Monetize a SaaS Offering
  • 2. How Pricing and Licensing Can Help Monetize a SaaS Offering Jim Geisman Bashyam Anant Principal/Founder Director, Product Management Software Pricing Partners Flexera Software© 2011 Flexera Software, Inc. | Company Confidential 2
  • 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, IncAll Rights Reserved -3-
  • 4. Topics  Pricing Model and Monetization  Choose Value Metric Carefully  Avoid Packaging Traps  Conclusions© Software Pricing Partners, IncAll Rights Reserved -4-
  • 5. Pricing Model and Monetization Pricing Model Affects Revenues Pricing Model Pricing Details Transaction Structure Licensing Structure© Software Pricing Partners, IncAll Rights Reserved -5-
  • 6. Pricing Model and Monetization Pricing Model Affects Revenues Pricing Model List Deal Prices Pricing Available Discount Packages Schedules Value License Metric Model© Software Pricing Partners, IncAll Rights Reserved -6-
  • 7. Pricing Model and Monetization Pricing Model Affects Revenues Pricing Model Order Size List Deal Customer Prices Pricing Growth Rate Available Discount Upgrade Packages Schedules Rate Value License Retention Metric Model Rate Viral Unit Growth Rate© Software Pricing Partners, IncAll Rights Reserved -7-
  • 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, IncAll Rights Reserved -8-
  • 9. Pricing Model and Monetization Pricing Model Profile List Deal Pricing Prices Pricing Details Available Discount Transaction Packages Schedules Structure Value License Licensing Metric Model Structure© Software Pricing Partners, IncAll Rights Reserved -9-
  • 10. Pricing Model and Monetization Early Stage SaaS Company List Deal Pricing Prices Pricing Details Available Discount Transaction Packages Schedules Structure Value License Licensing Metric Model Structure© Software Pricing Partners, IncAll Rights Reserved - 10 -
  • 11. 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
  • 12. Topics  Pricing Model and Monetization  Choose Value Metric Carefully  Avoid Packaging Traps  Conclusions© Software Pricing Partners, IncAll Rights Reserved - 12 -
  • 13. Choose Value Metric Carefully Align Metric with Value Dynos Workers Heroku© Software Pricing Partners, IncAll Rights Reserved - 13 -
  • 14. Choose Value Metric Carefully Correct Metric Scales with Value Connector Classes • Small Business • Standard • Enterprise© Software Pricing Partners, IncAll Rights Reserved - 14 -
  • 15. Choose Value Metric Carefully Just Because Everyone Does It… Follow your customers not your competitors (usually)© Software Pricing Partners, IncAll Rights Reserved - 15 -
  • 16. Choose Value Metric Carefully Examples CRM per sales rep RightNow Per user Developer tools per person CogHead / SAP Stock trading per trade/share Archipelago Credit processing % of transaction Verisign Transaction Survey per survey Zoomerang Check scanning per check Kodak Network management per device OpenView Insurance per policy Allenbrook Usage/ SW asset management % of revenue Flexera capacity Bandwidth/data transfer per GB ISP’s Direct mail mail list size ConstantContact© Software Pricing Partners, IncAll Rights Reserved - 16 -
  • 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, IncAll Rights Reserved - 17 -
  • 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, IncAll Rights Reserved - 18 -
  • 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, IncAll Rights Reserved - 19 -
  • 20. Topics  Pricing Model and Monetization  Choose Value Metric Carefully  Avoid Packaging Traps  Conclusions© Software Pricing Partners, IncAll Rights Reserved - 20 -
  • 21. Avoid Packaging Traps Limited Upsell Path Tokbox© Software Pricing Partners, IncAll Rights Reserved - 21 -
  • 22. 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
  • 23. Avoid Packaging Traps Complexity Heroku© Software Pricing Partners, IncAll Rights Reserved - 23 -
  • 24. Avoid Packaging Traps Unclear Differences Less Accounting© Software Pricing Partners, IncAll Rights Reserved - 24 -
  • 25. Avoid Packaging Traps Steps Must Be Logical and Clear Why 750 to 3,000? 15 to 38 Team Hours? 4-fold User step, 2-fold Storage Marketing Bridge step?© Software Pricing Partners, IncAll Rights Reserved - 25 -
  • 26. Topics  Pricing Model and Monetization  Choose Value Metric Carefully  Avoid Packaging Traps  Conclusions© Software Pricing Partners, IncAll Rights Reserved - 26 -
  • 27. Conclusion Pricing Model Affects Monetization Pricing Model Order Size List Deal Customer Prices Pricing Growth Rate Available Discount Upgrade Packages Schedules Rate Value License Retention Metric Model Rate Viral Unit Growth Rate© Software Pricing Partners, IncAll Rights Reserved - 27 -
  • 28. What Lies Ahead Early Stage SaaS Company List Deal Pricing Prices Pricing Details Available Discount Transaction Packages Schedules Structure Value License Licensing Metric Model Structure© Software Pricing Partners, IncAll Rights Reserved - 28 -
  • 29. What Lies Ahead Established SaaS Company Profile List Deal Pricing Prices Pricing Details Available Discount Transaction Packages Schedules Structure Value License Licensing Metric Model Structure© Software Pricing Partners, IncAll Rights Reserved - 29 -
  • 30. Conclusion Pricing Model + Back Office = $$$ Deliverables Entitlement Fulfill Order Pricing Entry Model Invoice Financials© Software Pricing Partners, IncAll Rights Reserved - 30 -
  • 31. 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
  • 32. Q&A© 2011 Flexera Software, Inc. | Company 32Confidential
  • 33. Making the Most (Money) with Your SaaS Offering Webinar Series Webinar #3: Subscription and Entitlement Management Best Practices for Your SaaS Offerings© 2010 Flexera Software, Inc. | Company 33Confidential
  • 34. Marriott San Jose ● October 24-26, 2011SoftSummit offers a comprehensive look at the entire software and device product lifecycle—providing you with strategies and the know-howto adapt your business to thrive in today’s fast- changing market.
  • 35. Thanks for Attending the “How Pricing and Licensing Can Help Monetize a SaaS Offering” Webinar… Jim Geisman Bashyam Anant Principal/Founder Director, Product Management Software Pricing Partners Flexera Software 508-647-0330 408-642-3912 jimg@softwarepricing.com banant@flexerasoftware.com© 2011 Flexera Software, Inc. | Company Confidential 35