Posted in Software Monetization 101
In this blog, and the ones that follow, we will explore not only the advantages of flexibility, but the various options software vendors have, as well as the practical implications for adapting to these market demands.
In today’s era of software licensing, you’ve no doubt heard mention of “flexible software packages” or “flexible software models.” But when people use these terms, what exactly are they referring to? The idea of flexible software models boils down to expanding your customer’s options. Instead of your customer deciding which of your existing products to purchase, it allows you the opportunity to easily craft a custom solution based on your customer’s actual needs.
In the current software landscape, customers require flexibility, and software providers need to be able to meet that demand. The old standard of selling perpetual licenses is outdated and fails to capture the full potential lifetime value of a customer. Perhaps most importantly, it also effectively reduces your customer satisfaction and encourages them to look elsewhere for other solutions.
Flexible Packaging: Do Customers Want What You’re Celling?
Flexible packaging can be easily understood through the prism of cell phone service packages. Based on a customer’s main concerns, they have the ability to choose the plan that best suits them. Customers who are more budget-conscious may opt to purchase the cheapest pre-paid plan, with a fixed amount of minutes and data at a lower rate. Some customers may prefer an “unlimited’ package, where they pay a premium, but don’t have to worry about running out of data or minutes.
There are also customers who choose to use a pay-as-you-go model, only being charged for the calls and internet that they actually use, allowing the cell phone provider to charge a higher per-minute rate, but giving the customer the chance to pay less overall, while also feeling more in control of their monthly bill.
One Size Doesn’t Fit All:
So, which of these cell phone plans are best? The answer, of course, is none of them, and that’s the whole idea. There is no one perfect solution for everyone, and forcing a customer into a specific pricing model that is less than ideal for them, only serves to push them towards a competitor who offers them flexibility.
As a software vendor, you know that software packaging is truly not a “one size fits all” market. The best you can do is be flexible, and give your customers the freedom to choose which packages, models and features are best for them. Even if your customers seem content with the current arrangement, in the ever-evolving software landscape, you can’t afford to be complacent. If you’re not offering this type of flexibility, eventually, your competitors will.
We have laid out our case for why companies need to adapt to the market’s demand for flexible software packaging models, but what are some of the options available, and as a company, how do you decide which options to offer your prospective clients? Stay tuned next week as we continue exploring the myriad of software models, and the practicalities involved in offering them to your customers.