The March Towards Subscription Pricing Part 3 - Choices.

My first blog post on this subject looked at pricing from all perspectives: Customers, Software Vendors and Value Added Resellers and my second blog focused on how this model might affect the Value Added Resellers current business model.  

In the discussions that ensued and subsequently from other material that I have found, I have come to the realization that there is not a one size fits all approach. And I believe that going forward everyone will win if there are choices. And these are my key reasons why.

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What Choices mean for Customers?

Though there are many benefits for customers to have all their applications in the cloud, some companies may not want to go down this route. For some companies security may be an issue and they may not feel comfortable having sensitive corporate information in the cloud. Other companies might want a combination of cloud and on premise solutions; they might feel that it is a better option for their business and also a good back up plan if they have a major outage in one of their systems. And there will be others who just want the ease of having everything in the cloud and knowing what their fixed monthly costs are. All these companies will want to work with Software vendors and Value Added Resellers who offer choices in the types of system available to them to meet their requirements. They will need to have choices in how they can buy their software; after all you could not make everyone purchase a pair of shoes if they were only offered in size 13!

What Choices Mean for Software Vendors?

For a traditional Software Vendor who has been used to selling on premise software to their customers and receiving a lump sum for each sale, being able to offer their prospective and renewing customers choices benefits their revenue stream long term. There are two reasons for this. Firstly by still offering their on premise solution model they will be able to sell full licenses, by keeping this type of revenue stream they will have the funds to continually maintain and improve their product. If they add into this mix a cloud pricing as well, although they will receive less revenue up front for those types of licenses, they have the potential of adding more customers, more quickly and ultimately increasing their revenues, maybe even doubling them, than they would have had by just selling their software in the traditional way. So for Software vendors choices should also be a win win.

What Choices Mean for Value Added Resellers?

In my opinion choices are where Value Added Resellers (VARs) will be able to show their true value to their customers. A good VAR will offer their customers the best solution based on what they know about the customer requirements, the type of business they are and how they want to run and maintain their business applications. The VAR’s knowledge of technology and their experience of the pro’s and cons of either a cloud or an on premise solution will be invaluable to customers. The VAR’s consulting experience will enable them to ensure their customers make the correct choices.  VAR’s will add value to these types of decisions, and they will realize that that this type of consulting will be the way to move forward in this fast moving and changing environment of how applications and services are delivered. These VAR’s will find their niche by selling their experience as well as the solutions that work.  And those that help their customers make the right choices for their business will continue to thrive as their customers will continue to turn to them for advice and support and in turn they will recommend them to others.   

Do you agree? Or have I missed something?