Many moons ago with the launch of Salesforce.com, the subscription saas model took off with a monthly per-user pricing model. Why spend thousands on software when you could just pay a monthly per-user fee and reap the benefits of continually semi-annual updates. Ahh, cannot forget those hyped up seminal annual updates!
Fast forward to today’s exploded cloud services market, and it is the mainstream for procuring software, however, the updates are expected to come much more frequently.
Nowadays, we have a tool for every function in business, from invoicing to sales and everything else in between. The problem is the burgeoning costs to justify the various tools required to run the business. Furthermore, most companies opt for only a limited number of user subscriptions, therefore, leaving many without access to the tool altogether.
The resurgence of the pay as you grow model
The utility-based (pay per use) pricing model is focused on overall usage and not a total number of users. When the demand is lower for using the tool, then the associated costs will also be lower. This can be a huge benefit for organizations that are still evaluating how the cloud tool will benefit its users without having to justify and commit to the monthly expense upfront.
In the conference call industry, the “pay per use” model has been in place for decades now and still is today. Having detailed monthly usage summaries is invaluable for companies to understand which departments are using the most and how much the costs are down to the individual user.
User requirements will vary
In every organization, user requirements will vary by individuals. Some may have an immediate need to use the cloud service, whereas, many others will be slow to adopt its benefits. However, if we determine up front who will have access and who will not solely be based on the monthly subscription commitments, then most likely we will not see the organizational change that could take place by allowing all employees access.
Does Pay Per Use cost more?
This depends on how you look at it. When we introduced our pay-per-use model to our customers, we found the majority reaped the benefits of instant cost savings vs the traditional monthly subscription. Over time, as they had opened up access to the service across the organization then yes overall usage did rise. Regardless, the averaged usage still provided cost savings, meanwhile providing user access to all employees.
In some cases, where the cost had risen beyond what was paid previously for subscriptions, the organizational benefits that we’re experienced internally far outweighed the slight increase in cost.
Big Companies Changing The Game
As Amazon states on their pricing description page:
“With AWS you pay only for the individual services you need, for as long as you use them, and without requiring long-term contracts or complex licensing. AWS pricing is similar to how you pay for utilities like water or electricity. You only pay for the services you consume, and once you stop using them, there are no additional costs or termination fees.”
This just seems to make a lot of sense. These trailblazers are setting new standards for how we procure software services.
We like pay per use overall as it’s a fair pricing model whether your clients are small startups or larger organizations. Also, it is a scalable pricing model regardless of the customers business they can adopt the cloud service internally and naturally grow user base without having to justify monthly (or many cases annual) commitments up front.