This is SaaS-Friendly Pricing
07/06/2018 • by Mike Brody • 0 comments
Six years ago, we made a change that got prospective clients as excited about Exago BI’s price tag as they were about the product itself. We knew we’d done something right.
Back in 2012, most embedded BI providers charged according to client size, which they measured in annual revenue, number of servers or cores, number of clients, number of reports, number of reports run in a given timeframe, or some other scale-dependent variable. This practice has begun to change but is still fairly common today. And while it may seem like a fair deal to the client, this system has a number of flaws.
First, it requires some form of auditing. The provider needs some way to verify that the client is the size it claims to be, which means that the vendor can’t just be a partner. It has to be a regulatory authority as well. This kind of relationship mandates an invasion of privacy and can put a real strain on the partnership, not to mention inflate the importance of things like server number or user number. Companies on the verge of crossing a threshold into a more expensive contract bracket will cut corners to delay the inevitable, compromising their core agenda in the process. This benefits no one.
Second, scale-dependent pricing makes budgeting a real challenge. How are executives supposed to plan the quarter if they can’t predict how much their growth will affect funds? It’s possible to do, but it involves building in lots of wiggle room and routinely rebalancing the balance sheet. The mental load of dealing with this much uncertainty is a burden in and of itself.
Last but not least, this pricing method penalizes growth. The more successful a company becomes, the more it has to pay. This paradigm is antithetical to our interests as a business partner.
So for the past six years, we’ve employed a flat rate pricing model, one that keeps budgeting simple and makes growth the top priority. A license entitles the client to embed Exago BI in one software application, regardless of how many servers it runs on, how many people use it, or how many reports it executes. No strings, no surprises. Surprises are for birthdays and baby showers, not budgets.
The flat rate model means that instead of counting users, we can focus on being a worthy business partner to our clients. If Exago BI is an extension of their products, then Exago Inc. is an extension of their companies. That partnership is what really matters because good will protects the mutual bottom line better than any scale-dependent pricing system ever could.