This commit is contained in:
@@ -2,20 +2,27 @@
|
||||
|
||||
(Joyce made two docs one for pricing as well as historical and projected license sales and a doc about payment processing providers both saved in raven project folder devdocs)
|
||||
|
||||
Note that we really need to consider SAAS right out of the gate because it's totally where things are going it seems and there are many arguments for it even if we are not hosting it yet we can offer it as a subscription they run on premise.
|
||||
See the [links below](#new-idea-perpetual-vs-subscription) and read through them take the time.
|
||||
|
||||
We're likely leaving a lot of money on the table by not having a subsription saas pricing model and we could potentially do both.
|
||||
Maybe three models:
|
||||
Perpetual on premise (most expensive up front no recurring revenue, charge for updates and support as required)
|
||||
Subscription on premise (kind of what we're doing now really except we also charge more up front and they can keep using it after they stop paying which is not how this normally works)
|
||||
Subscription hosted (We host they pay a flat fee per month / year to get access to latest version)
|
||||
|
||||
## Pricing for v8
|
||||
|
||||
IDEA: figure out average license cost over all sizes of existing license sales, factor *that* with the 19.4% inflation figure Joyce determined before and make that the average license price??
|
||||
For active subscribers the average price paid for licenses was 121.25 so with inflation of 19.4 that would be 144.78.
|
||||
Tech counts by level is single=30 $4,770.00 total sales, 5=85 $11,815.00 total sales, 10=110 $13,090.00 total sales, 15=15 $1650.00 total sales, 20=100 $9,900.00 total sales
|
||||
(more 10 level techs than any other level and single is kind of lame)
|
||||
So, if we flat price no volume discount and want the inflation increase, if we stuck with 189 for everyone using the single price that's actually a huge amount for the up to 20 crowd
|
||||
IDEA: figure out average license cost over all sizes of existing license sales, factor _that_ with the 19.4% inflation figure Joyce determined before and make that the average license price??
|
||||
For active subscribers the average price paid for licenses was 121.25 so with inflation of 19.4 that would be 144.78.
|
||||
Tech counts by level is single=30 $4,770.00 total sales, 5=85 $11,815.00 total sales, 10=110 $13,090.00 total sales, 15=15 $1650.00 total sales, 20=100 $9,900.00 total sales
|
||||
(more 10 level techs than any other level and single is kind of lame)
|
||||
So, if we flat price no volume discount and want the inflation increase, if we stuck with 189 for everyone using the single price that's actually a huge amount for the up to 20 crowd
|
||||
|
||||
The real revenue is in the subscription so a lower-ish license cost is where it's at
|
||||
But what if no one buys a subscription?? Maybe though, lower up front and no mandatory subscription which must drive some people away, means more sales when you have a sellable product like early days of AyaNova
|
||||
But what if no one buys a subscription?? Maybe though, lower up front and no mandatory subscription which must drive some people away, means more sales when you have a sellable product like early days of AyaNova
|
||||
|
||||
|
||||
|
||||
This is all about the initial license purchase, not the subscription which I haven't got to yet. Anyway, we were talking about a flat price per license no matter how many you buy. I still like that idea and was doing some calculations to figure it out. If we went that route then the pricing would make more sense to be calculated on the *average* price per license sold, not on the single user price which would end up being 90% higher for a 20 user site. I used our existing active subscribers as a basis to calculate the average price of each license sold. I totaled the amount we charged for all active licenses then divided by number of techs overall that the represent and came to $121.25 is the average price we charge per license. So with inflation using your calculation of 19.41% that's 144.78 flat rate price per tech.
|
||||
This is all about the initial license purchase, not the subscription which I haven't got to yet. Anyway, we were talking about a flat price per license no matter how many you buy. I still like that idea and was doing some calculations to figure it out. If we went that route then the pricing would make more sense to be calculated on the _average_ price per license sold, not on the single user price which would end up being 90% higher for a 20 user site. I used our existing active subscribers as a basis to calculate the average price of each license sold. I totaled the amount we charged for all active licenses then divided by number of techs overall that the represent and came to $121.25 is the average price we charge per license. So with inflation using your calculation of 19.41% that's 144.78 flat rate price per tech.
|
||||
|
||||
Except the current v7 license comes with 1 year of support and updates and I'm thinking of 90 days initial support and updates so basically we're taking away 9 months worth of support and updates which is not nothing either, not sure if that needs to be factored in or not?
|
||||
The "value" of a support and updates subscription in v7 terms is 35% of initial license price so using the average that's $42.43 a year per tech or $3.40 / month per tech.
|
||||
@@ -28,19 +35,60 @@ Alternative method of calculating average license price is to not use sold count
|
||||
15=1650=110 per user
|
||||
20=1980 =99 per user
|
||||
Average here = 125.00 per user so not much difference
|
||||
This means that the average v7 subscription charge per year is 43.75 (125 * .35)
|
||||
This means that the average v7 subscription charge per year is 43.75 (125 \* .35)
|
||||
Which means that the average v7 true initial license charge is actually $81.25
|
||||
And this also means that in v7 the subscription is worth $3.65 (avg) per month (43.75 / 12)
|
||||
So in v7 prices this also means that the subscription is worth $3.65 (avg) per month (43.75 / 12) so if v7 was using our new system it would mean
|
||||
we would charge $81.25 for a license plus $10.95 for the initial 90 days support for a total of $92.20, then if they purchase a sub it would (in v7 prices) be 43.75 for 12 months.
|
||||
So in v7 prices this also means that the subscription is worth $3.65 (avg) per month (43.75 / 12) so if v7 was using our new system it would mean
|
||||
we would charge $81.25 for a license plus $10.95 for the initial 90 days support for a total of $92.20, then if they purchase a sub it would (in v7 prices) be 43.75 for 12 months.
|
||||
|
||||
Meaning if use 19.4% inflation figure v8 would be $110.00 for the license and $52.20 per license for a years sub and updates.
|
||||
|
||||
ACTUAL INFLATION just looked it up is 24% between now and 2016 including the prior months of huge increases, let's just round that up to 25% because inflation is still on the up trend so:
|
||||
Taking the average v7 license plus 90 days v7 average sub cost is $92.20 + 25% = $115.25 1 tech + 90 days support in 2022 prices and yearly afterwards is $54.60 average per tech subscription (not factored tiers in yet)
|
||||
Taking the average v7 license plus 90 days v7 average sub cost is $92.20 + 25% = $115.25 1 tech + 90 days support in 2022 prices and yearly afterwards is $54.60 average per tech subscription (not factored tiers in yet)
|
||||
|
||||
### New idea perpetual vs subscription
|
||||
|
||||
Overall I'm thinking inflation alone works for us and not offering a discount for multiple
|
||||
There is something to be said for a subscription model even if we don't host it. In this system a "perpetual license" is a one time purchase and comes with no support or maybe a very short window they get to use it forever afterwards. The subscription is a rental service only aka a "term license", if they stop paying it stops working. Separate from hosted AyaNova.
|
||||
Businesses like having the option because one is a capital expenditure and one is a operating expense so depending on teh businesses age and status they may favor one over the other.
|
||||
|
||||
CUSTOMER FACTORS:
|
||||
|
||||
| Subscription | perpetual |
|
||||
| ------------------------------------------------ | ------------------------------------------------------------------ |
|
||||
| Charged as operating expenditure | Charged as capital expenditure |
|
||||
| Low up front cost | Large up front cost and cash outlay |
|
||||
| Small impact on P&L year 1 | Big impact in P&L year 1 |
|
||||
| Impact on P&L subsequent years | No impact on P&L subsequent years |
|
||||
| All charges in one fee | Software updates cost extra |
|
||||
| Automatic software updates | |
|
||||
| Shift budget to department rather than big whigs | Big expenditure means need the big shots to approve and is complex |
|
||||
| | |
|
||||
| | |
|
||||
| | |
|
||||
|
||||
OUR FACTORS:
|
||||
|
||||
| Subscription | perpetual |
|
||||
| --------------------------------------- | --------------------------------------------------------- |
|
||||
| Ongoing relationship with customer | Large up front revenu |
|
||||
| Opportunities for upsell and cross sell | Price negotiated once |
|
||||
| Investors value long term customers | Big impact in P&L year 1 |
|
||||
| revenue more than a single license | ongoing revenue from maintenance and prof svcs (reports?) |
|
||||
| so will benefit eventual cashout | (flat support update charges) |
|
||||
| Revenue predictability | |
|
||||
| NO need for legacy support | |
|
||||
| | |
|
||||
| | |
|
||||
| | |
|
||||
|
||||
Links to read with good ideas:
|
||||
https://baremetrics.com/blog/perpetual-license-vs-annual-license-vs-subscriptions
|
||||
https://baremetrics.com/blog/saas-pricing-models
|
||||
https://www.getapp.com/resources/software-pricing-models/
|
||||
https://www.pwc.com/mt/en/publications/assets/pwc-the-future-of-software-pricing-excellence-saas-pricing.pdf
|
||||
https://www.milnerltd.com/news/software-pricing-strategy-licence-or-perpetual/
|
||||
https://www.pricingsolutions.com/pricing-blog/subscription-based-software-pricing-how-to-migrate-customers-from-a-perpetual-to-a-subscription-model/
|
||||
https://www.linkedin.com/pulse/basic-differences-between-saas-subscription-perpetual-frederic-hanika
|
||||
|
||||
### Self installed
|
||||
|
||||
@@ -54,12 +102,11 @@ Overall I'm thinking inflation alone works for us and not offering a discount fo
|
||||
Hosting is a later thing, concentrating on self installed for now but here are some initial thoughts on it
|
||||
|
||||
- $TBD, in general, price will be significantly higher than the self installed option to account for server rental costs for us and extra time to manage the servers, the rest of support and other factors costs us pretty much the same (monthly vs yearly a separate issue below)
|
||||
- Price will likely be a factor of average server cost to rent and whatever time will be taken to manage them but must be in line with competitors so may not even be worthwhile, need to determine that later
|
||||
- Price will likely be a factor of average server cost to rent and whatever time will be taken to manage them but must be in line with competitors so may not even be worthwhile, need to determine that later
|
||||
- Code change required: license check internal change when in "Service" mode (already have service mode just not coded yet to count all active users instead of techs only)
|
||||
- will be priced by active user NOT by tech alone as it must account for extra work load on our rented servers we need to pay for
|
||||
- Must have monthly and yearly pricing that factors in the payment processor per-transaction charge (e.g. shareit 2.95 per transaction fee plus extra accounting hassle at our end)
|
||||
|
||||
|
||||
#### Existing active subscriber users
|
||||
|
||||
For the software license part, there is no affect on active subscribers unless they need to add an addition license as we are giving them the v8 tech license at no extra cost with their subscription
|
||||
@@ -77,7 +124,7 @@ PRICING AND PLANS THIS IS OFFICIAL HERE REPLACES ANYTHING WRITTEN ANYWHERE ELSE
|
||||
|
||||
45 days trial
|
||||
Flat price per license regardless of how many no discounts for bulk price to be xx.xx
|
||||
Includes 90 days support and updates after which they're on their own. In this way they don't feel coerced into a subscription which must be a turn off for a lot of people
|
||||
Includes 90 days support and updates after which they're on their own. In this way they don't feel coerced into a subscription which must be a turn off for a lot of people
|
||||
Separately they can purchase a support and updates subscription within 90days they get a discount of the ongoing price, after 90 days it's full price
|
||||
NO: this is changed to accomodate the UI - after expiration of subscription all users will get a popup dialog every login saying it's expired
|
||||
First year discounts to be determined then renewal is higher price and status that way unless we raise it.
|
||||
|
||||
Reference in New Issue
Block a user