Revenera Study Highlights the Importance of SaaS and Subscription Models for the Software Industry
The Revenera Monetization Monitor: Software Monetization Models and Strategies 2021 also highlights that complex and hybrid monetization models will dominate the market to deliver flexibility for producers and end customers
Itasca, IL - September 21, 2021 Revenera, producer of leading solutions that help technology companies build better products, accelerate time to value and monetize what matters, today released the Revenera Monetization Monitor: Software Monetization Models and Strategies 2021 report. Part of an annual series, this report provides product executives at software and device companies with benchmarks about software deployment, pricing and monetization.
The Revenera Monetization Monitor: Software Monetization Models and Strategies 2021 report is available here.
“Software companies are looking for ways to move to SaaS offerings and recurring revenue. While the transition accelerates, they must also deliver on the needs of their end customers, who might not be able to move at the same pace. The result is a robust mix of monetization and delivery models that technology companies offer today,” said Nicole Segerer, VP of Products and Marketing at Revenera. “Suppliers that want to get ahead of the growing complexity invest in better understanding product usage so they can make better informed roadmap decisions.”
Highlights from the Revenera Monetization Monitor: Software Monetization Models and Strategies 2021 report include:
- A one-size-fits-all approach to either monetization or deployment strategy isn’t sufficient to keep pace with varied customer needs.
- Software buyers demand hybrid monetization and deployment models. Today’s dominant monetization models (used for more than 51 percent of their business) are subscription (36 percent) and perpetual (24 percent) licensing models. In the coming 12–18 months, subscription and usage-based models will be the two largest growth categories for monetization models, with anticipated increased usage by 53 percent and 37 percent of respondents, respectively.
- Most companies have a mix of deployment models. Software as a service (SaaS) and on-premises software are both used extensively (for more than 51 percent of a company’s business) by 34 percent of respondents each; embedded software is still used extensively by 20 percent. SaaS is growing most rapidly, with 59 percent indicating an anticipated increased use the coming 12–18 months. An even greater reliance on SaaS is planned by product managers (72 percent).
- For software suppliers that are moving to the cloud, using SaaS as the dominant deployment model (for more than 70 percent of their products), the top monetization model is subscription/term.
- Software suppliers must pursue the goal of aligning price and value.
- Balancing price (expense for the customer) and value (perceived utility) proves challenging with hybrid monetization and deployment models. Only 30 percent of respondents say that pricing and value are “totally aligned.” Confidence in alignment between price and value jumps significantly for monetization models that are more accurately tied to measurements of usage and engagement. Of companies that can gather usage data “very well,” 61 percent feel pricing is aligned with value.
- The top impediment to aligning price and value is the lack of customer acceptance for new monetization models, a challenge that doubled in the past year.
- The desire to gather product usage data in the coming 1–2 years is growing, particularly among product managers, but the number of respondents who can currently gather product usage data very well decreased over the past year (from 32 percent in 2020 to 26 percent in 2021).
- Strategies for ongoing revenue growth require agility to respond to the drivers of change.
- Over the past two years, the top reason for changing software monetization models was to implement a recurring revenue model (reported by 62 percent). Organizations planning to change monetization models are doing so primarily to enter a new vertical market(s) (reported by 62 percent); product managers are more active in their pursuit of new vertical market(s), with 72 percent looking to make this move.
- Top motivators for changing licensing policies are to provide temporary evaluation/try-before-you-buy (reported by 41 percent); add/improve automated enforcement (39 percent) and add new pricing meters (34 percent).
- Licensing technology can help software suppliers measure the need for and implement changes. While homegrown licensing technology is still widely used, the adoption of software monetization platforms is up 28 percent in the past year.
The 2021 Revenera Monetization Monitor Software Industry Survey was conducted by Revenera from mid-April through mid-June 2021. This research project looks at software producers’ software business models, pricing, usage and transparency. The survey was undertaken globally. Job levels of the 374 survey respondents were: director and above (33 percent), manager/team leader (33 percent), and individual contributors/consultants (34 percent).
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.