Product Monetization Strategy: Your Forecast for the Future

If you’re responsible for developing a product monetization strategy, Revenera’s 2023 Monetization Monitor should be essential reading.

The annual report, based on a global survey of 450 software suppliers, is packed full of insights into evolving business models, pricing plans, and hybrid deployments, with key talking points including:

• 54% state delayed releases are the biggest barrier to revenue growth, creating widespread urgency for producers to optimize processes and consider how to reduce time-to-market.
• 59% plan to introduce consumption-based monetization in the next 12-18 months, an 18% increase on the previous year’s figures.
• Just 32% feel their pricing is “totally aligned” with the value provided to customers.

As organizations increasingly adopt recurring revenue models, there’s clearly a need to improve usage analytics to ensure customers get true value from their investment. This has the dual benefit of reducing churn risk while also informing roadmap decisions based on accurate data – combining to significantly boost revenue optimization.

Here are some other key findings from the latest study:

License Landscape

The changing face of software licensing and use rights is a constantly moving target, with suppliers frequently looking to refine controls and embrace new delivery models.

For companies planning to update their product monetization strategy over the next 12-18 months, the most common reason is to “better support pricing and packaging changes.”

Adding or improving automated enforcement and adopting new pricing meters are also key drivers for change, with 23% indicating they’ll implement usage-based licensing in the next 12-18 months.

Product Monetization Strategy Changes

The ability to enter new markets is the primary driver of planned change in monetization models, with 52% of respondents citing this as a catalyst for innovation.

However, moving to an “as-a-service” offering, selling to new personas in existing accounts, streamlining operations, and better supporting intelligent device models all scored highly on the scale:

Interestingly, 63% of respondents who changed models in the past two years did so to tighten enforcement and eliminate revenue leakage. In times of economic uncertainty, software suppliers are looking to get tough on piracy and overuse, and Revenue Recovery Services are becoming increasingly important.

Also noteworthy is the fact 82% of organizations have already implemented a subscription/term product monetization strategy at least moderately throughout their portfolio, which is up from 68% in 2022.

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What Technology CFOs Should Know When Adopting SaaS and Subscription

Growth in Product Usage Analytics

The ability to gain clear insights into how customers utilize your software can be a game-changer when it comes to revenue optimization.

Accordingly, 97% of respondents state they either already gather product usage analytics or at least plan to do so in the next 12-24 months.

As only 40% of producers feel they currently do a good job at monitoring usage, there’s plenty of room for improvement, especially as leveraging this data can be pivotal to enhancing customer success, entitlement management, and revenue recognition.

Additionally, for those looking to perform a SaaS transition, usage insights can be integral to helping prioritize roadmap developments.

It makes huge sense to invest in this area, and it’s promising to see such a strong uplift.

The Big Challenge: Aligning Price with Value

The ultimate barometer of a successful product monetization strategy is getting customers to see value in your solution, otherwise you’ll inevitably lose them.

However, there are many hurdles to achieving price and value alignment, with a lack of insights to monetize the most valuable features reported by 42% of respondents. behind a lack of insights into new personas and customer acceptance of new models:

Again, the case to embrace usage analytics is underscored with these findings, as getting clarity on how your product is being used can shine a light on monetization opportunities while also helping customer success teams drive adoption in under-utilized areas.

Ultimately, the more insights you glean into your audience, the better you can tailor your roadmap and communications, making you progressively indispensable as users become embedded in your world.

The more action you take to understand your community and solve real-world pain, the more appreciated you’ll become, so it pays to be proactive in providing value.

To see how your product monetization strategy compares to industry peers, please download the full 2023 Monetization Monitor and discover deeper insights from senior software leaders.