Pricing based on a subscription model
Anyone have any thoughts around pricing based on a subscription model. This is not ASP or as a service delivery but simply paying for products and services on a monthly basis instead of in bulk terms with minimal monthly maintenance.
Replies to This Discussion
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Permalink Reply by Valérie Maillet on -
What do you mean ? Does customer pay only for his consumption of services ?
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Permalink Reply by Elena Newton on -
Hi Nicole,
My company builds and sells b2b software for printing services. We looked into this as an option to give our customers an alternative to standard product purchase. We're actually doing something similar to what you're asking about in South America - only instead of an unending subscription, we're doing more like "lease-to-buy".
What kind of subscription model are you considering? What are your products?
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Permalink Reply by Nicole Schwarz on -
Hi Valerie and Elena,
Thank you for your replies. I work with the SSPA and posted this for another member. I have directed him to this post and expect he will repond when he can. We appreciate your being active in the forum!
Regards,
Nicole
Elena Newton said:Hi Nicole,
My company builds and sells b2b software for printing services. We looked into this as an option to give our customers an alternative to standard product purchase. We're actually doing something similar to what you're asking about in South America - only instead of an unending subscription, we're doing more like "lease-to-buy".
What kind of subscription model are you considering? What are your products?
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Permalink Reply by Jay Moorman on -
My company sells enterprise software for the receivables mgmt industry. What I am referring to is a pricing model where clients pay a monthly fee for an on-premise product. As an alternative to the traditional model where the customer purchases software by paying bulk product costs up front, a subscription model spreads out their payments over a period of years and then has a renewal for continued use. This can help selling to companies in a tight capital spending environment by moving the dollars to a monthly operational cost. I am interested in best practices in this area for incentives, terms, etc. I will be at the confernece this week if anyone would like a free dinner. :)
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Permalink Reply by Pamela Fowler on -
Being in the open source software space we do everything on a subscription based model not as a monthly renewal but on 1-year term basis. We do allow payment terms to be paid on a quarterly basis billed via PO which is controlled through our financial management and contract management systems.
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Permalink Reply by James Jobst on -
I know this is a little late from your original post, but here are some thoughts if you have not already encountered them. We provide a licensed software product at the local organization and enterprise level. What we have traditionally done is to imbed discounts in pricing to those clients that pay up front and then depending on how extended the terms end up, reduce those discounts to a full price model for those that spread out the payments. The challenge is being able to turn the software off and on based on receiving payments. Other considerations...Is this going to be offered to all clients, or on a case by case basis? If clients pay annually for ongoing maintenance and support or is this part of the purchase price up front, if annually is this also subject to payment terms? What systems are in place to support the invoicing and collections (one reason for removing discounts is that you are now increasing overhead to manage billing & collections more often)? Are you set up to allow the customer to pay automatically (electronic banking) to reduce paper and overhead? Good Luck!
Jay Moorman said:My company sells enterprise software for the receivables mgmt industry. What I am referring to is a pricing model where clients pay a monthly fee for an on-premise product. As an alternative to the traditional model where the customer purchases software by paying bulk product costs up front, a subscription model spreads out their payments over a period of years and then has a renewal for continued use. This can help selling to companies in a tight capital spending environment by moving the dollars to a monthly operational cost. I am interested in best practices in this area for incentives, terms, etc. I will be at the confernece this week if anyone would like a free dinner. :)
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Permalink Reply by christopher haskins on -
I've had those kind of intutive wishes pass by my thoughts. I think it would be a very good oppritunity but keep in mind the broadstream of my own expenditure release to mantain a motivational quota , if per chance you have an ideal company feel free to advise me
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