Benefits of Subscription-Based Pricing
Cost and convenience are among the top benefits of a subscription-based pricing model, whether for coffee delivery or ERP software. Think about how nice is it to have something turn up on your doorstep; something you need, right when you need it without having to think about it. Even better, consider the idea of turning on your computer to find your ERP software has new features, functionality, and bug fixes. You did not even have to go through a lengthy or expensive upgrade process.
Over the past few years, the software industry has made the move to the subscription model of software-as-a-paid-for-service, with payments made over time and/or based on usage. There are a variety of reasons for this industry shift: pressure from cloud options, changing customer behavior, not the least of which are the benefits of cost and convenience for both the business and the consumer.
For businesses, moving to a subscription payment plan moves your software from a capital expenditure to an operating expense.
The adoption of the cloud and open-source software, as well as the growth of digitalization and consumerization have led to this push for subscription-based business model. The cost savings realized are the main drivers for subscription. For example, a subscription-based model allows for:
- Software monetization. Usage-based subscription models in the cloud naturally lend themselves to flexible options for software monetization (such as pay-as-you-go and concurrent licenses). This breaks down many of the cost barriers and implementation hurdles many companies face when choosing an ERP and other company-wide software.
- Flexibility. If it is contracted for upfront, subscription-based pricing gives customers the flexibility to scale up and down according to their actual use, transactions or use of storage, with minimal upfront risk and minimum capital outlay. It gives the consumer the ability to budget and plan for their growth in a more manageable way.
- Affordability. Because a subscription is based on a controllable unit of specification, this approach gives business units some control over expected costs and a clearer picture of their IT-related costs.
Subscription-based pricing also has several convenience benefits. Access to up-to-date products is always available (cloud deployment is faster than on-premises), no need to wait for updates to be implanted, and no downtime. In addition, using a subscription-based model allows for:
- Agility. Subscription-based models allow for a more agile deployment cycle and faster time to value. In addition, the time-to-value for new features and functionalities is reduced, with a more frequent introduction cycle.
- Access. The subscription-based model gives all team members access to updated software, and in the cloud ensures that all are using the same version of the software.
The economy has moved into a more subscription-based pricing model for good reason: a subscription-based pricing model promotes greater flexibility, innovation, and agility for the consumer and predictable revenue streams for the business. For more on how ArcherPoint can help your business move to a subscription-based ERP pricing model, please contact ArcherPoint today.
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