Flexera Study Debunks the Myth That Licensing and Deployment Models Are Getting Easier to Manage
Software Suppliers Need the Flexibility to Navigate Hybrid Models
Itasca, IL - August 8, 2019 Flexera, a demonstrated leader in software installation, open source software scanning, and software monetization, today released the Flexera Monetization Monitor: Monetization Models and Pricing report. The report will help product executives in software and device companies benchmark pricing, licensing and deployment strategies against the industry.
The Flexera Monetization Monitor is available at https://info.flexerasoftware.com/SWM-WP-Monetization-Monitor-Report1.
“The world is getting more complex for companies selling technology. Software and IoT companies must navigate a matrix of monetization and deployment models to deliver the services customers want, in the way they want it. The Flexera Monetization Monitor shows that most software and technology suppliers that move from perpetual to subscription licensing and from on-premises deployments to SaaS recognize the importance of understanding consumption and usage. This knowledge provides a foundation for maximizing customer satisfaction and revenue,” said Nicole Segerer, Director of Global Enablement at Flexera. “The companies that have the best insights into their customers and flexibility with monetization models will be the most successful.”
Highlights from the Flexera Monetization Monitor: Monetization Models and Pricing report include:
- Today’s Monetization Models Vary: Subscription is already the most widely-used monetization model amongst software producers, but perpetual licenses are still very common: 74 percent of producers utilize subscription models for some or all of their products, compared to 65 percent utilizing perpetual licenses, 59 percent leveraging usage-based, and 47 percent using outcome/value-based models.
- Surging Subscription and Usage Monetization Models: Unsurprisingly, when software producers are asked how they will change their monetization models over the next 18 months, responses show that both usage and subscription models will see the strongest increases: 48 of respondents see subscription/term-based monetization growing, compared to 43 percent who expect to see growth in usage-based models, 32 percent who predict growth for outcome/value-based models, and 29 percent who see growth for perpetual license models.
- The Growth of SaaS and Reality of Mixed Deployment Models: Most organizations run a mix of deployment models, with on premise software maintaining a narrowing lead over SaaS: 52 percent already have moderate to extensive SaaS deployments, 63 percent have moderate to extensive on-premise software deployments, and 54 percent have moderate to extensive embedded software deployments.
- Customers’ Varied Needs Drive Flexible Models: Software producers will build on hybrid approaches for both monetization and deployments to meet the varying needs of their customers. For example, one third of companies that use SaaS as their primary deployment model indicate they still have to manage perpetual licenses as well, demonstrating that moving to SaaS doesn’t necessarily reduce complexity.
- The Elusive Balance Between Price and Value: The shift to subscription models requires producers to continuously deliver value through new features, functionality, and security updates in order to remain competitive and retain customers. While more than half (53 percent) of producers feel their pricing is aligned with value, a notable 44 percent are seeing problems and finding this difficult. Of those having issues today, 19 percent find customer acceptance to switch models a hindrance, and 17 percent find they are hindered from change due to insufficient customer usage insights.
- The Future Belongs to Those Who Adapt: With the widespread use of hybrid monetization and deployment models and the complexity they create, software producers will adapt their pricing and licensing strategies to achieve ongoing revenue growth. The top three drivers for shifting strategies are generating more revenue (63 percent); adjusting to new trends such as IoT (60 percent) and developing new pricing for smart devices based on software models (59 percent).
In 2019 Flexera conducted a global survey among software suppliers, specifically asking for monetization, licensing, and pricing trends in the industry. The survey was undertaken globally. Of the 321 survey respondents, 24 percent are director and above; 31 percent are manager/team leader, and 45 percent are individual contributors. Responses were provided both by Flexera customers and non-customers.
Revenera helps product executives build better products, accelerate time to value and monetize what matters. Revenera’s leading solutions help software and technology companies drive top line revenue with modern software monetization, understand usage and compliance with software usage analytics, empower the use of open source with software composition analysis and deliver an excellent user experience—for embedded, on-premises, cloud and SaaS products. To learn more, visit www.revenera.com.