Software Monetization in the Cloud: Stop #2 on the Path to SaaS Profitability — Achieving Product Versatility (Part 3 of 5)
Brace yourself – we are leaving the world of perpetuity and moving into a constant state of evolution! End-users are in the driver seat now and what they want they are going to get – if not from you, then from one of your largest competitors or a small start up that is willing to sell them the services they need, for the price they think is fair. You can have the most sophisticated, feature-rich offering on the market, but if you can’t offer flexible pricing and licensing models you will never reach your maximum potential! So what does it take to be agile?
- Product versatility – WHAT customer want to pay for
- Flexible licensing models – HOW customers want to pay for it
- Business Model Agility – ADAPTING to new customer requirements
In this post I will first discuss product versatility, or the ability to reach any customer with the right feature set, for the right price every time to maximize market applicability.
One size does not fit all – right? With software licensing, if done intelligently, one product CAN fit ALL, it is the pricing and feature bundling that requires a custom fit!
Product versatility requires you to first establish a value for each feature within your catalog and then have the ability to bundle those individual features into multiple service packages with a variety of pricing options. The ability to package components of your offering into different packages without any engineering effort enables you to quickly and cost effectively deliver the right offering for every customer every time. Just to paint a picture for you, in a recent dialogue with a customer who currently offers a fairly successful cloud service, their director of product management indicated that in the first 18 months the service was released the reengineered their business model 55 times!
When you build feature-level authorization and therefore packaging capabilities into your service catalog you really improve the overall accessibility of your application across a multitude of diverse markets. You can deactivate or remove premium features from a ‘basic’ version that you can offer at a lower cost to capture low end markets. Alternatively you can charge a premium for access to cutting-edge features that provide additional value to high-end customers or niche markets. One thing is clear, if you don’t have the ability to monetize individual features of your solution you end up significantly limiting your market applicability or the premium you can charge for your services. Both equal a lost revenue opportunity
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Other Posts in this series: