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How to Grow SaaS Revenue, Profits and Market Share with Use-Appropriate Software Licensing and Pricing

A SaaS Business Models White Paper

The initial wave of software-as-a-service (SaaS) was characterized by “one-size-fits-all” pricing. This was largely because SaaS vendors were out to pioneer a new market—and simplicity was a cornerstone of their pitch to early adopters. The offer of extremely simple and economical pricing helped these vendors overcome whatever resistance they may have encountered to a new and unproven model for software delivery.

With increasing adoption of cloud services, the SaaS marketplace has changed dramatically. SaaS and other on-demand models have now been fully embraced as compelling alternatives to traditional on-premises software deployment for many reasons. These reasons include reduced total cost of ownership, faster time-to-benefit, greater flexibility to increase or decrease capacity, and easier delivery to remote, mobile and/or third-party users.

To survive and thrive in an everything-as-a-service marketplace, SaaS vendors must be able to quickly respond to shifts in customer expectations and competitive landscapes. One-price SaaS limits revenue, market penetration and competitive strategy. Every SaaS vendor should therefore take steps now enable use-appropriate models for software licensing, bundling and pricing.

SaaS vendors that fail to evolve past a one-price model will continue to miss out on revenue opportunities. Those that adopt use-appropriate pricing, on the other hand, will grow revenue, margins, and market share. They will also be better equipped to use pricing as a strategic competitive advantage as the global SaaS market continues to grow and mature.

View the Video: Key Trends in Software Pricing and Licensing

Amy Konary from IDC shares findings from the Flexera Software survey.

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