Saas Pricing Models
SaaS pricing models
Following are some of the pricing models used in the industry for pricing SaaS:
Per Transaction Use or Utilization: If it is possible to define the usage of the service in terms of transaction for e.g. credit score evaluation, customer inquiry transaction based pricing model becomes the most attractive model. But this model has a potential disadvantage that the revenue generation purely depends on the business cycles experienced by the customer. If the customer's business (sector) under goes a down swing, the number of transactions would come down and may affect the bottom line of the SaaS provider.
Per User: The pricing is based on the number of users using the system and is mostly charged on a renewable (monthly/quarterly/ half yearly/ annual) subscriptions. The following are two types of pricing model available for use:
Named User: In this scenario, every user who uses the system is charged. Every user is uniquely identified in the system and access of service by the user becomes the basis of the price.
Concurrent User: In this scenario, the price is based on the number of concurrent users using the service. This is typically applicable for a departmental license where the person who is usingthe service may be different based on different parameters.
Capacity: Though the LOS systems are siloed, the processes for synchronizing them have evolved over time (with a significant associated cost) and due to the spaghetti nature of such developments, there would be chain effect in changing parts of processes if the complete impact if not understood.
Business Value: Significant resistances to change of the systems in the origination centers have been observed. Internal politics for vendor selection, vendor entrenchment, fear of new systems, fear of codified knowledge, unwillingness to change of processes are considered to be significant reasons...
View Full Essay