The future of software pricing excellence

An introduction

The shift in enterprise software sales from license to services is amongst the most dramatic and traumatic upheavals in the technology industry.

The future of software pricing
 

XaaS services

2011 XaaS services revenue

The new state of the art

The current state of pricing in the software industry is, to put it mildly, chaotic. Whilst many industry leaders realise their pricing is suboptimal, they don't know how to fix the problems.

Optimal pricing requires multiple inputs

The future of software pricing
 

Optimal pricing requires multiple inputs

The future of software pricing excellence: SaaS pricing

Pricing management is key to making a successful transition to the SaaS business model. PwC has identified the characteristics that define the leaders, laggards and mainstream practitioners of SaaS pricing.

SaaS pricing

The future of software pricing excellence: Transaction pricing management

Businesses with high profit margins are tempted to offer substantial discounts to capture new customers or keep current ones when faced with competitive pressures. This is an especially important issue in the software industry, where discounting off of the ‘list’ price of as much as 100% is common.

The role of a centralised pricing organisation

1 2 3 4
 

Key findings

The key factor separating industry leaders in transaction pricing management from the pack is a fully integrated, cross-functional approach that captures and leverages data about past deals to inform future deals.
A well-defined price waterfall provides the framework to manage price discounting and shape customer buying behaviour.
Without policy, governance and enforcement, it's impossible to realise the full potential value of a price waterfall framework and the metrics and analytics it generates.
By investing time and effort up front in careful design, software vendors can turn transaction pricing management into an engine that preserves or expands margins, encourages future revenue growth, and increases the ease of doing business.
 

Related materials

 

Contact us

If you'd like to talk about this or related topics, please contact us.

Mark McCaffrey
Global Software Leader
+1 (408) 817 4199
LinkedIn
Twitter
Tom Archer
US Technology Leader
+1 (408) 817 3836
Pierre Marty
European Software Leader
+33 1 56 57 58 15
Greg Unsworth
Asia Technology Leader
+65 6236 3738

The future of software pricing
 

Optimal pricing requires multiple inputs