Maybe you’ve thought about transitioning to a subscription model or an “as-a-service” type of business because you’re interested in creating recurring revenue. Before you do, there’s a multitude of potential pitfalls that most companies making the switch haven’t even considered.

1. % of businesses that plan to
switch all systems to SaaS
% of businesses that say
they are running almost
completely on SaaS
% SaaS spending is
expected to increase
A Practical Guide to
Launching Your X-aaS
Moving to a Subscription Model or an “As A Service” Business?
What You Might Not Have Considered.
Recurring revenue models are taking over. And, the proof is in the numbers. 80% of businesses already use at
least one SaaS application, 73% of businesses plan to switch all systems to SaaS, SaaS spending is expected to
increase by 44%, and 38% of companies say that they are running almost completely on SaaS. It’s undeniable.
Where the biggest shift in business in the past several years lies, however, has been the move to “as a service”
models for all industries. There’s no doubt that subscription offerings are the fastest-growing delivery mechanism
in the market and, before too long, this will be the dominant way of delivering services and products in the
economy. If you’re not considering it, you’re already behind the curve.
% of businesses that
already use at least one
SaaS application
80% 73%
44% 38%
“X” as a Service: The Future of Revenue
SaaS has evolved beyond the software sector. Since digital transformation has been in full swing, just about
anything and everything can be packaged and sold “as a service”. From Platform as a Service (PaaS) to even
1

2. 2
The benefits of recurring
revenue in this model are clear
— including better top-line
revenue and a much higher
business valuation.
Traditional, transactional customers typically cost
more to acquire, have higher churn rates, and much
lower brand loyalty, while subscription customers, on
the other hand, typically offer a higher lifetime value
with better retention. And, as younger generations —
who tend to prefer subscription models — enter the
marketplace, companies can set the tone for brand
loyalty from the outset of their buyer journey.
The subscription and recurring
revenue model revolutionary shift
has only been accelerated by the
great digital transformation and
the pandemic.
For many traditional companies that weren’t designed
from the ground up as SaaS businesses, they’ve been
left scrambling to adapt.
Meanwhile, many newer enterprises are building their
entire business around the “as a service” model in order
to meet the growing market demand. Still, many legacy
companies have already successfully made the shift,
growing their revenue and market share to heights never before seen in their history. Though the considerations
for a traditional business in making the shift are fairly significant as compared to those that are architecting a
new business around “as a service,” there are still corollary questions both types of organizations should ask of
themselves when opting for a recurring revenue model.
As with any new business endeavor, due diligence requires introspection into every aspect of the organization. This
is particularly true when choosing to assemble a subscription model. Subscription models and products usually
include many life cycle changes, differentiating them from traditional purchases, but thankfully, there’s automation
software that can help manage these rapidly emerging and complex digital business models.
Infrastructure as a Service (IaaS), the derivations have led to the adoption of the collective, general “X” in XaaS,
which represents the innumerable products, tools and technologies that vendors can now deliver to users as a
service over a network. Leveraging the internet of things – and all manners of platforms – goods and services that
can be accessed or shared via cloud computing and remote access are being sold all over the world, en masse.
Quickly dwindling are the days of local or onsite enterprise transactions, and every savvy business with an internet
connection is adapting to XaaS to get their “X” products to market in a service format.

3. 3
Transitioning to recurring revenue
will impact your entire operation,
and end-to-end infrastructures
will require larger, company-wide
wholesale changes, so you’ll need to
prepare with the right tools in place.
If anything can be sold through a subscription
model, then there should be nothing holding
your business back from making the move
toward recurring revenue. So, let's show you
how you can maximize monetization for your
recurring revenue business. But first, there are
five vital areas you may not have previously
considered.
5 Vital ThingsYour Business Needs to Consider
Before Moving to a Subscription Model
1.
Only a few years ago, if you wanted a quality infrastructure, you would have to buy an entire suite of expensive
hardware from a tech manufacturer, have it delivered on-site and pay in full. Today, however, you can buy the
hardware on-demand in a consumption model, receiving only what you need, on-premise and as a pay-as-you-go
subscription service. So don’t let conventional wisdom and old methods of doing business dissuade your transition
and think, “I can’t really sell my services as a subscription or as recurring or as on-demand,” just because that was
the way you used to do it in the past. The paradigm has shifted.
Defining Your Catalog
Part of your initial journey has to be understanding how you can package your services. It can be an
overwhelming prospect to embark on this change, but by identifying the products and services you’ll
offer and how you plan to deliver them, you can better define your catalog and your pricing. Asking the
hard questions is a must before transitioning your catalog. You must not only define your product, but
you also need to determine your monetization strategy and how you want to sell it. You’ll need to decide
if you want to sell your service or product direct or sell it through a channel — perhaps you can even split
your goods or service between channel distribution and direct. And, defining the price, can actually prove
to be one of the most challenging decisions.

4. 4
An important exercise is to ask this series of questions:
Are we prepared to invest
in a process and tools that
are flexible and dynamic
enough for us to be able
to adjust our strategy
midstream at any point?
How do our customers want
to consume our product?
What are the products
going to be and how are we
going to package them for
subscriptions?
And will those purchased
tools enable us to move in a
different direction, enhance
our existing offerings,
or provide additional
offerings?
Do we want to enable
enterprises to actually
buy direct?
Do we want to enable
e-commerce?
How complex is our
channel structure and is
it empowered with any
flexibility?
Asking these discovery questions enables you to then prepare your catalog — and your business — to be ready for
the new digital commerce so you can mobilize your business and propel it toward scaling and growth.
Don’t inadvertently create barriers of entry for your customers — all of your flexibility and power comes from
preparing, and then defining, your catalog with these pressing questions. Then, you can better determine pricing
packages, because it’s not as simple as just silver, gold, or platinum — it can be far more complex.

5. 5
2. Defining How to Price Your Strategies
Your subscription pricing structure will provide the framework for how you’ll charge, but not how much
you’ll actually be charging. That’s where determining a pricing strategy comes into play. When you have
an understanding of your customers and how they want to consume your product, that will drive your
pricing strategy. Will you go with cost-plus pricing? Competitor-based pricing? Or value-based pricing?
Though a complex consideration, most models fall into four categories.
There are typically four pricing structures:
Fixed
or Flat-Rate
Tiered Per Unit
or User
Usage
or Consumption
Deciding the pricing structure will then inform your pricing strategy. Whether you’re considering your competitor’s
pricing or working out your own pricing and adding margin, you’re going to end up leaving money on the table.
Pricing strategies put customer value front and center, are driven by data and match your customers' purchasing
and usage habits. So instead, data needs to be at the heart of your pricing decisions. Failing to base subscription
pricing on data could cause you to overprice or underprice your product or services. Data, then, is the mechanism
that informs your overall pricing.
Service inventory — also known as digital inventory — is a collection of your customers’ data that enables you to
best manage your service and your pricing. This digital information comes in many forms of assets; a username is a
digital asset, a license code is a digital asset, and a phone number is a digital asset. In reality, in your daily life, you
have many of these; your ID, your health insurance member number, the VIN number on your car, your software,
or even your IP address. You need to be able to control, manage, and deliver your digital services via subscription,
therefore you need the management tools, infrastructure, and plan in place to control this digital inventory of
digital data assets. And, the truth is, if you don't have digital asset management, you can’t have an effective pricing
strategy, nor do you have scalability. Imagine if you needed to alter 20 subscriptions — are you able to determine
or identify which particular 20 units you are going to change or terminate or exchange or upgrade? If you don't
have a connected repository of all this information in one place, you end up having to attempt to manage all of that
manually with spreadsheets. Guess what happens? You can’t scale, you end up with major gaps and an
out-of-control amount of spreadsheets.

6. 6
Again, you’ll need to ask yourself the hard questions to determine a pricing
strategy based on your data:
How much are we
going to charge?
Will there be different
tiers — silver, gold,
platinum?
How can you
simplify your product
offering’s complexity
to fit these tiers?
What features will be
included in each tier?
Basic? Advanced?
Are we going to
price tier based
on usage with a
consumption model?
How do we then
align our pricing with
that consumption
strategy?
What are our fixed
and variable costs?
How does our
competition price?
A major consideration with all of these variables is if you should adopt a consumption-focused subscription model.
If you cannot repackage your services because they are too complex or if you try to squeeze everything into just
three packages, you will either outprice or underprice your services. So, you’ll either overcharge customers for
services because you have to bundle them and include them in these three packages or overprice them and get
yourself driven out of the market competition. A consumption approach can address some of this complexity. Take
a cell phone for example; you can pay $1 a month for the device, but the minute you connect it and you start using
it, you get charged for consumption — whether it’s $5 per month or $100. The cost can go can up or down based
on usage, so as a customer, if you’re not using it, you don’t have to pay the consumption portion. And, for the
vendor, if they lower the price and the customer uses that extensively, they’re not leaving money on the table.
Are we going
to invoice per month
or annually?

7. 7
So it makes the offering and the money both flexible for the customer and the provider — both are actually getting
their opportunity to expand to get the right return on their service and their investment. As you can imagine, using
a consumption subscription will require a sophisticated automation platform.
The challenge when determining pricing strategies for subscription is that what you used to be able to do
with manual processes and personnel cannot scale when the tidal wave of transactions starts rolling in. With
subscription, the $100 or even $500 a month is not just confined to, say, 100 transactions. Now, it’s hundreds
of thousands, if not millions of transactions. You have to be ready to respond to this change because your price
strategy will ultimately determine your scalability.
The only way you can really scale
the business to handle such a large volume
of transactions is if you automate as much of it as you can.
A platform that automates the pricing will save you endless
amounts of frustration during this process.
3. Understanding the Complexities of Business Processes
How are you going to manage your users? How are you going to scale? It boils down to the previously
mentioned digital asset management component — the more data you have collected on your customers,
the better. Again, you’ll need software to collate this inventory of information. From there, you can have a
better handle on managing the actual users. Managing credentials so the users are permitted to leverage
your service dovetails into this concept.
In the old, traditional business world, a company could buy 100 user licenses; once they reached that limit
they could just buy more and didn’t care who used the licenses and didn’t necessarily need to track them.
However, in the new world of subscriptions, you absolutely have to keep track. No longer are you selling a
100-user enterprise license — you’re selling 100 individual subscriptions. In today’s world, it’s all based on
the individual user. With that said, everything is monetized at the user level, not at the corporate level. Ergo,
you need to be able to know who is using what — whether it’s a software license, a device, or a telephone
number — so that you can then measure, at the user level, what that user is actually consuming.

8. 8
Understanding your users and
their data informs, effectively, all
of your processes — not just your
pricing strategy.
How then, are you going to then distribute the user
credentials and log-on information to the customer?
Because you can't start the billing process or the
subscription process before you send credentials.
And, if it takes someone manually going in and
building that customer and their profile, it could be
a week or even a month before they get credentials,
depending on the complexity of the application. With the right software, however, it could be minutes. You
also need to connect the ordering process with the provisioning process to then activate billing upon receiving
their credentials. Enterprises need to carefully ensure that there’s a seamless integration between platforms that
protects their process, as well as their data integrity.
Having these processes interconnected is crucial. Otherwise, the systems, software and people supporting your
processes all get disrupted. Since you already have a significant investment in those resources, you want to be the
least disruptive as possible and leverage software that integrates seamlessly into your existing processes.
4. Understanding The Complexities of Renewals and Upselling
Once your customers are onboarded, your success is predicated on upselling and renewing them, in
which, automation will play a pivotal role. In essence, it’s no different than setting goals and parameters
for retention and upselling in traditional businesses. In practice, however, it’s an entirely different beast
altogether. How do you make sure that your customer contracts that are going to expire next month are
renewed? It’s not just about next month either, you’ll need to have complete visibility on what’s going
to expire now, in three months, or in a year. And, don’t forget the concept of scalability — if you have
to manage your renewals in spreadsheets, you’re going to run into trouble, and fast. What happens
when you go from having 100 transactions to 1000 transactions? How are you going to track 100,000
renewals? What if you have 100 million renewals or 100 million subscriptions? A spreadsheet is not going
to keep up. That mindset is illogical. Integrating a platform that can automate these processes will factor
into your ability to drive more revenue.

9. 9
Automation can help process every aspect of renewals and upselling:
Automatic
renewals
Tracking renewals,
upgrades and
downgrades
Managing
consumption
Finding the
customer on
upgrades
Running
payments
Pushing customers
to annual
subscriptions
instead of monthly
Implementing
loyalty
discounts
Sending
“thank you”
and renewal
notifications
One of the biggest advantages of recurring revenue is that it’s running for a long time so it adds value and stability
to your company — and automation is your secret weapon. If you don't have automated renewal management for
contracts and services in the form of some integrated platform, the complexities of subscription processes will be
insurmountable for traditional-minded businesses. Automation simplifies and allows you to scale without throwing
indefinite amounts of personnel to solve complex scenarios.
5. Understanding Backend Reporting and Analytics
There will be a significant shift in your reporting on a recurring revenue model because “as a service”
businesses don’t rely on traditional GAAP (Generally Accepted Accounting Principles) metrics. You’re
measuring other things that make a difference, so you cannot measure your success of a subscription or
recurring revenue business based on those traditional principles. You need other tools or platforms, and
measurements in place to be able to understand the value of the business because, in recurring revenue,
it all becomes highly complex.

10. 10
There are three primary measures in subscription businesses that help you
understand value:
LTV (Lifetime Value)
Customer Acquisition Costs
Churn
LTV is an important calculation to consider upfront, because, in a recurring
revenue stream, the initial value may only be a paltry $100 per month.
You’ll also need to consider new recurring revenue, expansion
recurring revenue and even negative churn. Margin analytics
also factor in — your contract margin, your cost margin and
even your margin against your invoice costs from upstream
providers. If you're tracking costs in the ERP and you're tracking
revenue in the billing system, you can only consolidate at
the aggregated amounts. You cannot really get breakdowns
at the individual product. What happens when you collect
your revenue, suppress your cost and pay commission to your
salesperson or to the reseller or distributor? Are you really
making enough money in this channel? You have to make key
margin decisions, not just revenue ones. And the only way to
know how to make those decisions is if you are tracking margin
for every single sales transaction for every service or product that
you sell. The only way for you to be able to do that is to actually have
your revenue engine and calculate the cost and margin.
Calculating these elements, along with having the ability to forecast so you can scale and
build your business, are the foundation for growth. These are all highly complicated analytics and reporting metrics
that you’ll need to navigate in a subscription model, and without a sophisticated and flexible platform, it will be near
impossible to manage.
Deciding to move to a subscription model is the easy part. As you have seen, launching a subscription model for
recurring revenue opens a pandora’s box of complexity. Moving your entire company and processes to adopt a new
way of doing business requires new solutions that meet your needs. You want to have the advantage of implementing
an end-to-end infrastructure that is as seamless as possible.
Margin and profitability
trackability and visibility
at the granular level are
essential to success in a
subscription model. If you
have a tool, like a margin
analyzer, you can have full
control of profitability and
your margin.

11. 11
Drive Recurring Revenue
and Offer Customers
Flexibility with a Subscription
Model Using the Right Tools
Leveraging a sophisticated automation platform that
offers flexible solutions will give your organization
competitive, strategic and organizational advantages
by simplifying the complex world of scenarios that
subscription models present. At BluLogix, we remove the
challenges when transitioning to a subscription model.
Our flagship platform, BluIQ™, will enable you to deploy
quickly, and cost-effectively and embrace everything
that makes your business unique:
Complexity Simplified:
Whether it’s channel management,
globalization, digital asset
management, billing complexity
or custom processes/experience,
BluLogix allows you to handle
complexity with the ease of an out-
of-the-box solution.
No compromise — your
business model, your way:
Other subscription management
platforms force you to compromise.
They were built for businesses
designed as SaaS from the ground
up. Your business model wasn’t,
this is how you evolve your
business model to XaaS without
compromising what you’ve built.
Get there faster:
Operational within 90 days!
Concierge onboarding, intuitive
UI and simple integrations to
CRM and ERP systems add up
to rapid deployment and cost-
effective projects.
Handling a full range of billing scenarios, from the very simple to the most advanced and complex, including
multiple microtransactions per day, while servicing multiple channels and different tiers of customers and recurring
subscriptions, BluLogix offers a cohesive overall approach to the quote-to-cash process.
Ready to see how it works? Book a demo todaywith one of our billing experts below and we’ll showyou
how BluLogix accelerates revenue growth, enables digital transformation and empowers channels.
Schedule a Demo
443.333.4100 | info@blulogix.com | www.blulogix.com