The document provides a step-by-step guide for optimizing the SaaS business model through five key steps: tracking usage, identifying patterns, segmenting customers, testing models, and measuring results. It emphasizes the importance of aligning offerings with customer value and continuously iterating based on real usage data. The approach aims to maximize revenue by creating tailored product packages that cater to different customer needs.

1. Cloud Monetization: A Step-by-Step Guide
to Optimizing Your SaaS Business Model
Shlomo Weiss
VP of Business Development
May 9, 2012
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2. Typical SaaS Company
Approach…
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3. It starts with a land grab …
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4. …and turns into “How do we optimize?”
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5. A Balanced Business Model
Monetization
(LTV)
Cost to
Acquire a
Customer
(CAC)
Source: David Skok, Matrix Partners
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6. Questions we often hear…
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7. What business model should we use?
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8. How do we optimize our offering?
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9. What metric should we use to charge
our customers?
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10. Maximizing Revenues
Lower
Price
Higher
Price
Segmented
Price
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11. Match Offering to Value
Received by the Customer
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12. Segmented Offering
Packages with different
+ Value A, B and C values, where values can
be:
• Features
+ Value A, B or C • Resources
• Service Levels
• Frequency/duration
Standard Package • Etc.
Light Version
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13. Optimized Offering
Packages with different
+ Value A, B and C values, where values can
be:
• Features
+ Value A, B or C • Resources
• Service Levels
• Frequency/duration
Standard Package • Etc.
Light Version
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14. But, how do we get there?
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15. It’s complicated…
Elements of a SaaS business model
Price ($X or free)
Metric (user, transaction, instance, bandwidth, click, print, save, etc.)
License Model (subscription, pre-pay, post paid, metered, concurrent users)
Package (Standard, Basic, Pro, Enterprise, etc)
But which combination is right for you?
Option 1 Option 2 Option 3 Option 4 Option 5 Etc….
Price A , Price B, Price A, Price C, Price D, …….
Metric B, Metric B, Metric C, Metric B, Metric D, …….
License A, License D, License B, License A, License C, …….
Package C Package A Package B Package A Package C …….
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16. Challenge: How to take the guesswork out
of finding the right model?
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17. 5 Steps to Optimize Your SaaS
Business Model
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18. 1. Track Usage
Implement usage tracking to understand how
customers are using our service today
Resources
Users
Content
Features
Bandwidth
Modules
Storage
Instances
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19. 2. Identify Patterns
2A - Analyze usage data to identify patterns
Frequency of use
By % of users
Peak usage times
Grouping of types of usage/users
Usage over time
2B - Survey/Speak with users to validate findings
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20. 3. Segment Accordingly
Optimized
Customer Product Market
Segmentation Packaging Applicability
(The right offering for
every customer)
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21. 4. Test Models
Run A/B tests to try out new models
Existing users
New customers
Have systems in place to easily implement and adjust
Pricing
Metrics
License models
Packages
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22. 5. Measure Results
Select packages based on the results of A/B testing
Discontinue packages that are not performing well
Continue to iterate and refine offerings that perform well
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23. 5 Steps to Optimize Your SaaS Business
Model
Track
Usage
Measure Identify
Results Patterns
Test
Segment
Models
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24. Bringing it all together
SaaS application for Beta management
2007: 2011:
Seat Based – Optimized Offering
2002: Usage Limits – Segmented
Perpetual
Packages
License
2009:
Seat Based
Editions
2005:
Annual Subscription
– Unlimited Usage
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25. Additional Tips
Link model to value provided to customer
Need to find the right balance: segmentation vs.
keeping things simple
Enable common features to be used by
customers of different sizes
Consider combining different models
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26. To Sum it Up
One size does not fit all
Segment your offering to maximize revenue based on
real usage data & customer feedback
Continuously iterate to improve your offering
Make sure you have the processes and systems in place
to enable you to optimize your business model
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27. Software Monetization in the Cloud
• Flexible Service Catalogs
• Automated Provisioning
• Service Usage Control
• Service Usage Measurement
Booth
BOOTH
FREE #13
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TRIAL
Visit us today at www.SentinelCloud.com @LicensingLive

28. Thank You
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