The free-market economy is a wonder to behold. On one hand you can see businesses making money for correctly priced and delivered products and services. On the other hand you can see a whole population of consumers – businesses and individuals – who are voting with their wallet on which company delivers the best value.
Not to simplify economics, but supply and demand has worked pretty well for hundreds of years. The only change to that model – and it’s a big change based on technological advances – is the ability of companies to add value to your purchase even during the delivery process. It’s an economic game-changer and one that Pam Miller of IDC commented on recently on the Avnet blog.
To recap Miller’s assertions, the product and service subscription model has matured to the point that flexible pricing, increased usage data, and better evaluative tools make it the best choice for nearly all businesses. In her post, she says that “consumption pricing better matches utility to expense, and is rapidly becoming more important as SaaS services expand and use cases diversify.”
Further, customer demand for visibility is driving these changes and here at Orbitera we adamantly agree. Miller is spot-on with her commentary. While there might be customers who are perfectly happy with a lump-sum monthly bill, the majority have woken up to the value a variable pricing model delivers. In fact, some companies have woken up to the reality that if they can be more efficient, they might be more successful for a longer period of time.
Imagine that! Business continuity enabled through productivity and smarter operations.
In some ways, this change in services and billing is going to create hurdles. As Miller calls them ‘challenges for partners and vendors alike’. But at the end of the day it all resolves itself through better information. Understanding usage at all levels and allowing partners (and ISVs) to deliver a better service to their customers is what makes this change so valuable in the marketplace.
It’s supply and demand all over again. Just as innovation happens when end users ask for more capabilities and solutions, innovation in SaaS and software products’ delivery processes deliver more value. Ultimately it comes down to money that can be used elsewhere in the enterprise to drive growth, expand operations and make investments in other innovations.
Miller wraps up her column by saying the “consumption pricing model is very different than subscription pricing” but the end result is going to be success for everyone involved. We applaud her for such a succinct evaluation of the marketplace and for being able to see how customer retention, clarity of billing and usage, and up-to-the-second reports put more control in the hands of companies across the globe.
We agree entirely that today, consumption pricing is what businesses are demanding what many markets need. To learn more about how Orbitera is on-board with pay-as-you-go functionality and the power of a robust software marketplace, check out our latest ebook for ISVs. We’re putting the power exactly where it belongs: back in the hands of businesses.