If you’re responsible for developing a product monetization strategy, Revenera’s Monetization Monitor should be essential reading.
The annual report based on our survey of global software suppliers is packed full of insights into how they are evolving business models, pricing plans, and deployment options to meet customer expectations and stay competitive in today’s market.
The first report in the 2022 series focuses on Monetization Models and Strategies, and results indicate the trend toward SaaS offerings and subscription-based licensing continues to grow as publishers transition with hybrid deployment models.
When planning your product monetization strategy, take note of the following:
- Only 26% of software suppliers believe they currently collect product usage data “very well”
- 41% plan to introduce consumption-based monetization in the next 12-18 months
- 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:
The changing face of 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 29% indicating they’ll implement usage-based licensing in the next 12-18 months.
Product Monetization Strategy Changes
The ability to enter new vertical markets is the primary driver of planned change in monetization models, with 65% of respondents citing this as a catalyst for innovation.
However, moving to an “as-a-service” model, eliminating revenue leakage, improving customer adoption, and offering usage-based licensing all scored highly on the scale:
Interestingly, eliminating revenue leakage is up significantly year-on-year, from 47% in 2021 to 63% in 2022. 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 52% of organizations have already implemented a recurring revenue model, while the remaining 48% intend to implement one – making it a cornerstone of every product monetization strategy.
You may be interested in: 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.
While only 18% of respondents state they plan to gather product usage analytics in the next 12-24 months, that’s double the number from the previous year – indicating a trend that could continue to gather pace. (Stay tuned for the second report in our series which focuses on software usage analytics for more insights in this area.)
As only 26% of vendors 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 cited as the most common issue:
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 Monetization Monitor report and discover deeper insights from senior software leaders.