Showing posts from April, 2010

SaaS Pricing Models (part 3)

In the previous posts we unveiled a number of different pricing models for SaaS applications. In this turn I’d like to explore the reasons why similar products, priced with similar models, can vary so much, in terms of final price.
Let’s just remember that the two basic elements of costing are:
a) Initial Fee (or start-up cost – this can even go down to zero)
b) Periodical costs per “unit” (whatever this is…)

Multitenant vs single tenant
It is obvious that if you board a single-tenant solution, you will be provided with your own server (physical or virtual), your own database instance and your own application instance (executables or whatever this is). All of these require additional effort to support and maintain from the Vendor’s side. And this will obviously reflect on your costs. In addition, initial setup will require additional effort that simple does not exist in case of multi-tenant solutions.

Level of application parameterization
If the application supports extensive parameterizatio…

SaaS Pricing Models (part 2)

In this post we shall continue with the discussion on several Pricing Methods of SaaS that started in the previous one. Here we go:

Pricing per Transaction: This is an entirely different model. In this model, we are not counting users, time or modules. A business application is offered as a whole (in most cases a core-business-function type of application). The pricing is done on the basis of transactions done by any number of users in any time unit. Of course, then main thing here is to define what a transaction actually is.
For example, in banking applications a “transaction” could be one complete loan application (of course, technically speaking, this is not ONE transaction, but business-wise it is). It could also be a cashier transaction from the bank teller. If this is an outsourced Credit Scoring function, then a transaction would be one score result (regardless of the number of loan co-applicants).
Another example is this of an accounting application: A transaction could be one l…