The ubiquity and massive growth of subscription licensing have created a model that appears beyond reproach. Upon closer inspection, however, software is no longer getting cheaper, broader, and deeper for customers. Recently, the likes of Meta, Netflix, Microsoft, Oracle, SAP, and Salesforce have all announced price hikes as high as 24% for specific products or services. A new round of layoffs is underway across tech as well. Somewhere along the way, the economies of scope and scale have fallen out of whack, and business customers have been stuck with the check, made out month by month, user by user.
Rather than contributing to this chasm, software providers can drive growth by passing along the inherent benefits of the cloud and subscription licensing down to the customers. This was, after all, the initial promise of the model some 20 years ago. In my experience, longevity in the market relies on boosting the productivity, agility, and bottom lines of business customers. In other words, adding value rather than restricting it will improve both the health and sustainability of the subscription economy and its merchants. Providers can approach this strategy in the following ways.
Migrating from one tool or system to another is painstaking, costly, and disruptive. If offered at all, trial accounts are underpowered with limits on data processing, storage, usage, and timeframe. Broadening customer trials in length and scale has a twofold benefit to vendors. First, providers get insight into adding users’ effect on the company’s performance, resources, and costs, allowing companies to modify their delivery and pricing without affecting existing, paying customers.
The moment when you gain benefits from incorporating flexibility and choice of scale options into your offering is the expansion of new business. As published by Harvard Business Review, the Financial Times conducted an experiment in which it removed consumers’ ability to view three single articles. in place, promptly imposing a paywall. Their online page traffic dropped by 30% and they experienced a long-term decline in the number of new subscribers. “Forcing all users to convert at their first scale on would mean wasting 79% of conversions, which equates to tens of millions of dollars in scale or lifetime value. “
This is because consumers prefer to delight in a product and accept it as true with its manufacturer before making a purchase decision. In the case of software, where transactions can run into millions of dollars, corporations would be content to shop around until they locate it. a suitable solution from a worthy and accepted seller at a moderate price; However, in the current state of the industry, they may simply be buying food forever.