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

Making the Most (Money) with Your SaaS Offering

Webinar Series

Webinar # 2

How Pricing and Licensing Can Help Monetize a SaaS Offering

How Pricing and Licensing Can Help

Monetize a SaaS Offering

Jim Geisman

Principal/Founder

Software Pricing Partners

2© 2011 Flexera Software, Inc. | Company Confidential

Bashyam Anant

Director, Product Management

Flexera Software

© Software Pricing Partners, Inc

All Rights Reserved- 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

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Topics

Pricing Model and Monetization

Choose Value Metric Carefully

Avoid Packaging Traps

Conclusions

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Pricing Model and Monetization

Pricing Model Affects Revenues

Pricing Model

Licensing

Structure

Pricing

Details

Transaction

Structure

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Pricing Model and Monetization

Pricing Model Affects Revenues

Pricing Model

License

Model

Value

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

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Pricing Model and Monetization

Pricing Model Affects Revenues

Upgrade

Rate

Order

Size

Viral Unit

Growth Rate

Customer

Growth Rate

Retention

Rate

Pricing Model

License

Model

Value

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

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Pricing Model and Monetization

Potential Revenue Leaks

Initial Revenue Stream Units licensed

Amount invoiced

Product mix

Downstream Revenue Repeat purchases, timing

Churn

Upgrades

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Pricing Model and Monetization

Pricing Model Profile

Pricing

Details

Licensing

Structure

Transaction

Structure

License

ModelValue

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

© Software Pricing Partners, Inc

All Rights Reserved- 10 -

License

ModelValue

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

Pricing Model and Monetization

Early Stage SaaS Company

Pricing

Details

Licensing

Structure

Transaction

Structure

Poll QuestionDo 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

© Software Pricing Partners, Inc

All Rights Reserved- 12 -

Topics

Pricing Model and Monetization

Choose Value Metric Carefully

Avoid Packaging Traps

Conclusions

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Choose Value Metric Carefully

Align Metric with Value

Heroku

Dynos

Workers

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Choose Value Metric Carefully

Correct Metric Scales with Value

Connector Classes• Small Business

• Standard

• Enterprise

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Choose Value Metric Carefully

Just Because Everyone Does It…

Follow your customers not your competitors (usually)

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Choose Value Metric Carefully

Examples

CRM per sales rep RightNow

Developer tools per person CogHead / SAP

Stock trading per trade/share Archipelago

Credit processing % of transaction Verisign

Survey per survey Zoomerang

Check scanning per check Kodak

Network management per device OpenView

Insurance per policy Allenbrook

SW asset management % of revenue Flexera

Bandwidth/data transfer per GB ISP’s

Direct mail mail list size ConstantContact

Per user

Transaction

Usage/

capacity

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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

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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

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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, Inc

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Topics

Pricing Model and Monetization

Choose Value Metric Carefully

Avoid Packaging Traps

Conclusions

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Avoid Packaging Traps

Limited Upsell Path

Tokbox

Poll QuestionWhat 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

© Software Pricing Partners, Inc

All Rights Reserved- 23 -

Avoid Packaging Traps

Complexity

Heroku

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Avoid Packaging Traps

Unclear Differences

Less Accounting

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Avoid Packaging Traps

Steps Must Be Logical and Clear

Marketing Bridge4-fold User step,

2-fold Storage

step?

15 to 38 Team

Hours?

Why 750 to

3,000?

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Topics

Pricing Model and Monetization

Choose Value Metric Carefully

Avoid Packaging Traps

Conclusions

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All Rights Reserved- 27 -

Conclusion

Pricing Model Affects Monetization

Upgrade

Rate

Order

Size

Viral Unit

Growth Rate

Customer

Growth Rate

Retention

Rate

Pricing Model

License

Model

Value

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

© Software Pricing Partners, Inc

All Rights Reserved- 28 -

Pricing

Details

Licensing

Structure

Transaction

Structure

License

ModelValue

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

What Lies Ahead

Early Stage SaaS Company

© Software Pricing Partners, Inc

All Rights Reserved- 29 -

Pricing

Details

Licensing

Structure

Transaction

Structure

License

ModelValue

Metric

Available

Packages

Discount

Schedules

List

Prices

Deal

Pricing

What Lies Ahead

Established SaaS Company Profile

© Software Pricing Partners, Inc

All Rights Reserved- 30 -

Conclusion

Pricing Model + Back Office = $$$

Order

Entry

Fulfill

Invoice

Deliverables

Financials

Entitlement

Pricing

Model

Poll QuestionIf 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

Q & A

32© 2011 Flexera Software, Inc. | Company Confidential

Making the Most (Money) with Your SaaS

Offering Webinar Series

Webinar #3:

Subscription and Entitlement Management Best

Practices for Your SaaS Offerings

33© 2010 Flexera Software, Inc. | Company Confidential

SoftSummit offers a comprehensive look at the

entire software and device product lifecycle—

providing you with strategies and the know-how

to adapt your business to thrive in today’s fast-

changing market.

Marriott San Jose ● October 24-26, 2011

Thanks for Attending the “How Pricing and Licensing

Can Help Monetize a SaaS Offering” Webinar…

35© 2011 Flexera Software, Inc. | Company Confidential

Jim Geisman

Principal/Founder

Software Pricing Partners

508-647-0330

jimg@softwarepricing.com

Bashyam Anant

Director, Product Management

Flexera Software

408-642-3912

banant@flexerasoftware.com