Revenera Study Uncovers Importance of Business Model Flexibility

It is more important than ever for software companies to offer products and pricing that maximize revenue. This is the conclusion of the recent 2020 Revenera Monetization Monitor: Monetization Models and Pricing report. Part of an annual series, this report provides product executives at software and device companies with benchmarks about pricing, delivery and monetization.

"Software suppliers continue to review their monetization and deployment models to meet customers' needs," said Nicole Segerer, vice president of product management & marketing at Revenera, a division of Flexera. "The move to subscription and usage models continues. In some cases, it has even accelerated."

Highlights from the 2020 Revenera Monetization Monitor: Monetization Models and Pricing report include:

1. Most suppliers offer multiple monetization and deployment models: Software buyers demand hybrid monetization and deployment models—not a single solution for selling and delivering software. Today's dominant monetization models (used for more than 50 percent of their business) are still subscription (37 percent) and perpetual (34 percent) licensing models. In the coming 12–18 months, subscription and usage-based models will be the two largest growth categories for monetization models. Concurrently, most companies have a mix of deployment models; SaaS is growing most rapidly, with 67 percent indicating an anticipated increased use of the model.

2. Complexities of hybrid models make it challenging to correctly align price and value: Software suppliers seek this balance in order to support high customer satisfaction and retention rates, while remaining competitive in the market. Insignificant insights into both usage (as reported by 36 percent) as well as user personas and priorities (reported by 33 percent) present the top hurdles to aligning price and value. Nearly half (47 percent) of respondents are willing to improve value for customers, but many suppliers struggle to gather the requisite product usage data: less than a third (32%) of all respondents indicate that they're currently doing this well; an additional 28% are able to collect product usage data, but their processes require manual intervention or engineering work.

 3. Innovative pricing and licensing strategies are required for ongoing revenue growth: As the COVID-19 pandemic demonstrates, suppliers who efficiently monetize what matters—through automation and based on clear insights into usage—will be able to enable efficiencies that support their businesses. Plans to change licensing strategies are driven primarily by the needs to tighten license controls, accurately price usage, and lower the barriers to entry. Among companies planning to change licensing strategies in the coming 12–18 months, planned changes include adding/improving automated enforcement (reported by 30 percent), adding new pricing meters (reported by 28 percent) and providing temporary evaluation/try-before-you-buy options (reported by 27 percent). The top motivators for changing pricing and licensing policies vary between companies that have already initiated change (where the top driver is the need to respond to competitive dynamics, as reported by 62 percent) and those planning to change their models (where revenue generation is the top driver, reported by 63 percent).