Pay-per-use Software Pricing: Pressure Is On SaaS Vendors

IDC says SaaS vendors are going to have to introduce more flexible pay-per-use pricing to meet the needs of customers flocking to the cloud computing model.

"While customer interest in pay-per-use (PPU) pricing is not a new phenomenon, the expansion of software as a service (SaaS) offerings and the advent of cloud computing are accelerating this trend. A recent software pricing survey by International Data Corporation (IDC) shows that customers want software pricing models that allow them to pay only for what they use while maintaining an even distribution of costs over time. To achieve this, vendors and customers will have to work together to redefine the software value framework.

'IDC believes that the software industry must move from a position where value is equal to the product to a model where real value lies in the ease, intuitiveness, and seamlessness of the experience,' said Amy Konary, research director, Software Pricing, Licensing, and Delivery. 'Licensing models that provide customers with access to positive experiences must also take into account the heterogeneous nature of the customer base as well as the role of the individual in value creation. For this reason, software packaging and pricing constructs must provide a level of granularity that enables the customers to participate in the value-creation process.'"