20 Sep SaaS pricing and the cloud: Making it an innovation enabler for SMBs
The greatest promise of the cloud has always been freedom. Internet of Things (IoT) startups all over the world benefit from the flexibility that large cloud providers like Amazon Web Services (AWS) give their customers. In fact, it is hard to imagine how a young cellular IoT connectivity company could succeed without the ability to deploy and scale a global infrastructure in no time and at an affordable cost.
The conclusion we’ve drawn at EMnify is simple: our customer’s success is our success. We strive to empower our customers, many of them startups, with the technology, flexibility and scalability that enabled our own business from day one. A lot of this comes down to pricing.
Being an IoT startup today is as hard as it gets. Not only do you need to understand the application layer – you also need to build and produce sensors and combine all components into marketable products. A technical team works tirelessly to develop and ship the best possible product that it can. Our concern, as a cellular IoT connectivity provider, is to help startups tackle the business-critical challenge of connecting their devices – the product – securely and reliably, at a price that supports their business model. Here, flexibility is key.
Consider for a moment the characteristics of the industry that our founders were aiming to disrupt when they created EMnify: namely, the mobile network operators (MNOs). It is fair to say MNOs are not known for their flexibility. In fact, the MNO pricing model excludes a significant number of smaller players from their services entirely. Our aim was and is to offer the best possible sourcing model for as broad a customer base as possible.
Don’t take advantage of your customers
We all know the binding 12- or 24-month contracts when buying a mobile phone combined with a contract. And while we do understand that we pay for phones on installments, it is a different story for SIM cards and connectivity contracts.
There are two reasons why MNOs sell yearly contracts: guaranteed revenue and simpler capacity planning. While securing revenue and forecasting is important for every company, capacity planning should be simplified by deploying in the cloud – benefitting both the MNO and the customer.
From where we’re standing, SaaS pricing should be framed to benefit the customer because as providers, we share in their success.
How SaaS pricing should be
Flexible: The cloud is on-demand. So why do customers have to sign a 12- or 24-month contract? SaaS applications fail or succeed during their onboarding phase. Nobody wants to change solutions after a couple of weeks or months. But the option should be there. There is also the simple fact that plans change. I rarely encounter customers whose projects are on time and in budget and service providers should account for that.
Transparent: Customers buy services that fuel their growth, and they need to have the security that their cost will remain calculable. Want to expand your business into new regions? Want to deploy additional services? Do you need premium support or carrier-grade service-level agreements (SLAs)? There needs to be an understanding that these things are calculable and transparently priced.
Value-based: API-centred automation and self-service functionality does not only empower customers and developers, but also removes the need to charge customers for manual engineering costs. A guiding principle for all cloud service providers is to create products that are easy to use and where no hacks or scripts are required to be deployed. Customer should pay for value, not for the effort they create due to unfinished or cumbersome products.
Simple: While it is not easy to offer a streamlined purchasing option to all customers, SaaS companies should thrive to do so and continuously work on simplifying their purchasing process. Yes, there are complex products, but nobody should sit through a 30-minute pitch deck to find out what the price for an application is. Customers cannot be strong-armed into buying anymore. If a provider doesn’t at least try to make doing business simple, alarm bells should ring.
Ethical: Customers should love using your product. And every company should put their customers in the center of their activities and work hard for their continued business. Transferring the power to terminate the contract to the customer shows that a company has faith that they cannot only enable customer success now, but also that they can do so in the future.
So why is sourcing cloud services still difficult these days?
In the world of technology startups, technology is – unsurprisingly – the primary focus. The positioning and selling of that technology is secondary. In some ways, this is fair enough. The technology is complex. Transitioning from a traditional business-like cellular connectivity to a SaaS delivery model requires a lot of time and resources, because much of the provisioning and service delivery need to be re-invented and redesigned to work as a cloud service.
In our industry, we are all tech-driven. However, being tech-driven to improve the sophistication of a product for the sake of it, is one thing. Being tech-driven to improve user experience is a whole other story. That is where truly sustainable success takes shape.
- How much can we streamline onboarding, while adding powerful functionality that our customers would benefit from greatly?
- How can we balance simplicity and sophistication, while trying to develop a powerful yet easy to use application, that is marketed and sold with the customer as the number one priority?
This is what keeps us up at night and fuels our motivation to work hard to solve our customers’ connectivity problems, so that they can focus on what they do best: Building and selling great IoT products and services.