Newer models of cloud software pricing are emerging that do a better job at associating the cost of the software with the customer's value/KPI's. A good example of this is usage-based pricing (aka UBP). This trumps the typical user-based pricing options that still dominate the market, in which the focus is on the number of users in your organization that can log in to the software with a username and password. To some degree, it makes a lot of sense. The more people using the platform, the more demands put on the cloud platform itself such as storage, integrations, throughput, security etc. etc. (*Note that while it is an important factor, I’m conveniently leaving out the benefits associated with economies of scale for the cloud vendor as they increase the number of users using their software). So the traditional model of user-based pricing made sense initially when cloud software was somewhat new and vendors were trying to figure out a way to grow their business in a predictable way, that seemed to reasonably align with the customer expectations of growth.
However when we make a shift to focusing on actual customer value, not just the number of user accounts (keep in mind that there is a big distinction between a "user" and an "active user"), the importance of your users experience becomes extremely important. It's easy to create a new user account and start paying the incremental annual fee, but:
- Are your staff actually having a good experience using the software?
- Are they more efficient, thus saving time?
- Are they getting more insights into the data that moves through the system so as to make better decisions?
- Are they frustrated with elements of the user interface that make them wish for the good ol’ days before the cloud software was implemented?
All of these (and more) are legitimate questions to ask your staff internally after you’ve been on the solution for a little while. If we are defining the price we pay by the number of users that have access to the system, wouldn’t it be prudent to ensure the users are actually benefiting from it? It’s not to say that you’re going to disable all of those unhappy users and move to get rid of the software altogether (unless a very thorough review deems that necessary), rather it’s a data driven way (leveraging internal surveys, looking at the software usage metrics and setting up focus groups etc.) to ultimately have a value-focused, and collaborative conversation with the software vendor about what (if anything) can be done to enhance the user experience.
This spirit of collaboration (as opposed to just complaints) is a way to bolster the outcomes for both sides. You, the customer, end up with happier, more productive staff. And the cloud software vendor ends up with an customer that is much more likely to increase their use of the solution and/or be an advocate for it. If approached reasonably (i.e. considering software changes, and the time it may take to develop them, as well as openness to revisiting your own internal processes), the end result will be a win-win for everyone.
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