The document discusses how pricing and licensing can help monetize a software as a service (SaaS) offering. It covers how the overall pricing model affects key revenue metrics and potential revenue leaks. The webinar focuses on choosing the appropriate value metric, avoiding packaging traps, and how subscription and entitlement management can help monetize a SaaS offering. It provides examples and polls questions to engage participants.

1. Making the Most (Money) with Your SaaS Offering
Webinar Series
Webinar # 2
How Pricing and Licensing Can Help
Monetize a SaaS Offering

2. How Pricing and Licensing Can Help
Monetize a SaaS Offering
Jim Geisman Bashyam Anant
Principal/Founder Director, Product Management
Software Pricing Partners Flexera Software
© 2011 Flexera Software, Inc. | Company Confidential 2

3. The Story Line
 Overall pricing model affects SaaS success
 Affects key revenue metrics
 Revenue leaks often due to lack of attention
 Leaks interfere with SaaS monetization
 Where to focus effort
 Some elements more important
 License metric and packaging are fundamental
 Topics
 Pricing model is more than price levels
 Selecting and assessing license metric
 Packaging traps to avoid
© Software Pricing Partners, Inc
All Rights Reserved
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4. Topics
 Pricing Model and Monetization
 Choose Value Metric Carefully
 Avoid Packaging Traps
 Conclusions
© Software Pricing Partners, Inc
All Rights Reserved
-4-

5. Pricing Model and Monetization
Pricing Model Affects Revenues
Pricing Model
Pricing
Details
Transaction
Structure
Licensing
Structure
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6. Pricing Model and Monetization
Pricing Model Affects Revenues
Pricing Model
List Deal
Prices Pricing
Available Discount
Packages Schedules
Value License
Metric Model
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7. Pricing Model and Monetization
Pricing Model Affects Revenues
Pricing Model Order
Size
List Deal Customer
Prices Pricing Growth Rate
Available Discount Upgrade
Packages Schedules Rate
Value License Retention
Metric Model Rate
Viral Unit
Growth Rate
© Software Pricing Partners, Inc
All Rights Reserved
-7-

8. Pricing Model and Monetization
Potential Revenue Leaks
 Initial Revenue Stream
 Units licensed
 Amount invoiced
 Product mix
 Downstream Revenue
 Repeat purchases, timing
 Churn
 Upgrades
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-8-

9. Pricing Model and Monetization
Pricing Model Profile
List Deal Pricing
Prices Pricing Details
Available Discount Transaction
Packages Schedules Structure
Value License Licensing
Metric Model Structure
© Software Pricing Partners, Inc
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10. Pricing Model and Monetization
Early Stage SaaS Company
List Deal Pricing
Prices Pricing Details
Available Discount Transaction
Packages Schedules Structure
Value License Licensing
Metric Model Structure
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- 10 -

11. Poll Question
Do you use a tiered-pricing approach based on available packages,
value metric or license model for your products?
11 © 2011 Flexera Software, Inc. | Company Confidential

12. Topics
 Pricing Model and Monetization
 Choose Value Metric Carefully
 Avoid Packaging Traps
 Conclusions
© Software Pricing Partners, Inc
All Rights Reserved
- 12 -

13. Choose Value Metric Carefully
Align Metric with Value
Dynos
Workers
Heroku
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14. Choose Value Metric Carefully
Correct Metric Scales with Value
Connector Classes
• Small Business
• Standard
• Enterprise
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15. Choose Value Metric Carefully
Just Because Everyone Does It…
Follow your customers not your competitors (usually)
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16. Choose Value Metric Carefully
Examples
CRM per sales rep RightNow
Per user
Developer tools per person CogHead / SAP
Stock trading per trade/share Archipelago
Credit processing % of transaction Verisign Transaction
Survey per survey Zoomerang
Check scanning per check Kodak
Network management per device OpenView
Insurance per policy Allenbrook Usage/
SW asset management % of revenue Flexera capacity
Bandwidth/data transfer per GB ISP’s
Direct mail mail list size ConstantContact
© Software Pricing Partners, Inc
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17. Value Metric
Testing for Value Scalability
 Do customers pay more when getting more
value?
 Example (Company 1 vs. Company 2)
 Same total users, same email volume and
storage
• Many vs. few partners
• Many vs. few “big” partners
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- 17 -

18. Value Metric
Testing for Value Scalability
 Do customers pay more when getting more
value?
 Example (Company 1 vs. Company 2)
 Same number of users
• More vs. less time in video chat
 Same minutes of video chat
• Many vs. few users
© Software Pricing Partners, Inc
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- 18 -

19. Value Metric
Ensure Metric Scales with Value
 Metric should relate to value delivered
 Must be trackable
 Metrics not always obvious
 Competing choices
 May need surrogate
 Test if metric scales with value
 Two scenarios
 More vs. less of an attribute
 Would “more” scenario pay more?
Attribute (examples)
• Size (of company, group, user pool)
• Individual skill, usage
• Use or “consumption” of metric
• Revenue generation
• Cost savings
© Software Pricing Partners, Inc
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- 19 -

20. Topics
 Pricing Model and Monetization
 Choose Value Metric Carefully
 Avoid Packaging Traps
 Conclusions
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- 20 -

21. Avoid Packaging Traps
Limited Upsell Path
Tokbox
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22. Poll Question
What is your estimate of revenues you are leaving on the table because
of “one size fits all” pricing?
22 © 2011 Flexera Software, Inc. | Company Confidential

23. Avoid Packaging Traps
Complexity
Heroku
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24. Avoid Packaging Traps
Unclear Differences
Less Accounting
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25. Avoid Packaging Traps
Steps Must Be Logical and Clear
Why 750 to
3,000?
15 to 38 Team
Hours?
4-fold User step,
2-fold Storage Marketing Bridge
step?
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- 25 -

26. Topics
 Pricing Model and Monetization
 Choose Value Metric Carefully
 Avoid Packaging Traps
 Conclusions
© Software Pricing Partners, Inc
All Rights Reserved
- 26 -

27. Conclusion
Pricing Model Affects Monetization
Pricing Model Order
Size
List Deal Customer
Prices Pricing Growth Rate
Available Discount Upgrade
Packages Schedules Rate
Value License Retention
Metric Model Rate
Viral Unit
Growth Rate
© Software Pricing Partners, Inc
All Rights Reserved
- 27 -

28. What Lies Ahead
Early Stage SaaS Company
List Deal Pricing
Prices Pricing Details
Available Discount Transaction
Packages Schedules Structure
Value License Licensing
Metric Model Structure
© Software Pricing Partners, Inc
All Rights Reserved
- 28 -

29. What Lies Ahead
Established SaaS Company Profile
List Deal Pricing
Prices Pricing Details
Available Discount Transaction
Packages Schedules Structure
Value License Licensing
Metric Model Structure
© Software Pricing Partners, Inc
All Rights Reserved
- 29 -

30. Conclusion
Pricing Model + Back Office = $$$
Deliverables Entitlement
Fulfill
Order Pricing
Entry Model
Invoice
Financials
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31. Poll Question
If you offer tiered pricing for your SaaS offerings, which approach best
describes how you keep track of customer entitlements?
31 © 2011 Flexera Software, Inc. | Company Confidential

32. Q&A
© 2011 Flexera Software, Inc. | Company
32
Confidential

33. Making the Most (Money) with Your SaaS
Offering Webinar Series
Webinar #3:
Subscription and Entitlement Management Best
Practices for Your SaaS Offerings
© 2010 Flexera Software, Inc. | Company
33
Confidential

34. Marriott San Jose ● October 24-26, 2011
SoftSummit offers a comprehensive look at the
entire software and device product lifecycle—
providing you with strategies and the know-how
to adapt your business to thrive in today’s fast-
changing market.

35. Thanks for Attending the “How Pricing and Licensing
Can Help Monetize a SaaS Offering” Webinar…
Jim Geisman Bashyam Anant
Principal/Founder Director, Product Management
Software Pricing Partners Flexera Software
508-647-0330 408-642-3912
jimg@softwarepricing.com banant@flexerasoftware.com
© 2011 Flexera Software, Inc. | Company Confidential 35