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More than half of companies are planning to move to subscription models in the next 18 months, according to a report from Revenera, but at the same time, a one-size-fits-all approach to either monetization or deployment strategy isn’t sufficient to keep pace with varied customer needs.
Software buyers need to consider that there is high demand for hybrid monetization and deployment models. Today’s dominant monetization models (used for more than 51% of their business) are subscription (36%) and perpetual (24%) licensing. In the coming 12 to 18 months, subscription and usage-based models will be the two largest growth categories for monetization models, with increased usage anticipated by 53% and 37% of respondents, respectively.
What’s driving change?
Over the past two years, the top reason for changing software monetization models was to implement a recurring revenue model (reported by 62%). Organizations planning to change monetization models are doing so primarily to enter a new vertical market or markets (reported by 62%); product managers are more active in their pursuit of new vertical market(s), with 72% looking to make this move. The top motivators for changing licensing policies are to provide temporary evaluation/try-before-you-buy (reported by 41%); add/improve automated enforcement (39%) and add new pricing meters (34%).
Still, software suppliers must pursue the goal of aligning price and value.
Only 30% of respondents say that pricing and value are “totally aligned.” Confidence in alignment between price and value jumps significantly for monetization models that are more accurately tied to measurements of usage and engagement. Of companies that can gather usage data “very well,” 61% feel that pricing is aligned with value.
The Revenera Monetization Monitor: Software Monetization Models and Strategies 2021 report was designed to find out how technology companies are monetizing, and plan to monetize, their software. It was conducted by Revenera from mid-April through mid-June 2021. The 374 survey respondents were director and above (33%), manager/team leader (33%), and individual contributors/consultants (34%).
Read the full report by Revenera.
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