Blog Entry

Sep 20
2012 

Software Monetization and the Rise of Subscription-Based Pricing Models

As software vendors move to software as a service, how are they handling the challenge of adapting their pricing strategies?  Recently, IDC’s Amy Konary sat down with TMC’s Erin Harrison, Executive Editor, Cloud Computing, to talk about the evolving pricing model in the software monetization market.

According to Konary, software monetization in the cloud naturally lends itself usage-based subscription models and increased transparency for tracking.  Automated tracking of entitlements and license usage down to the feature level has become expected, and cloud application developers need to carefully consider how they plan to integrate tracking and reporting into their solutions.

SafeNet’s Michelle Nerlinger added that customers are seeing the benefits of shifting from a lump-sum to a usage-based model, and most customers see an increase in revenue flow once they make the transition.  As software vendors now have ongoing communications with customers in a usage model, the revenue-generating tasks of up-selling and cross-selling became easier and more natural.

Another important factor to developing a successful software monetization strategy is having a clearly defined tracking policy that balances granularity with simplicity.  Konary says this is where many software companies struggle in their approach.

Amy Konary will be presenting on the topic of “The New Look of Software Monetization” at LicensingLive! on October 2nd in Cupertino, California.  Limited space is still available for this free event sponsored by SafeNet.  Register for LicensingLive! today.