Pricing and the Enterprise Social NetworkBy BroadVision on January 04, 2011
Social business needs to be priced according to the growth of the network. The old enterprise software licensing model will not work. Nor will the simple SaaS model work. Both are based on presumed usage. Better to charge customers on a pay-per-use model — one what they use. That more accurately reflects the realities of growing a social network.
One of the major components of social business that most needs to be updated is pricing. While companies are learning to expect certain things from enterprise social networks, such as cloud-based personalization and functionality, all too often the method with which they pay for these services is antiquated. Traditionally, for an organization to use enterprise software, it has paid a fee that is determined by presumed usage. However, whether that organization’s usage was higher or lower, or if a higher or lower number of individuals than was predetermined use the software, the price remained the same. This appears to be unfair, both to the organization and the software provider. Also, it’s totally unrealistic to assume how much an organization plans on using enterprise software before that software is even implemented.
There’s a much better way: pay-per-use. Cloud-based service providers should work with a realistic pricing model, one that better fits the reality of “cloud economics.” Rather than assuming that a set number of individuals within the company will utilize the network, it makes much more sense to work from a pricing plan that is based on the actual number of users who sign-in to the network and use it regularly. Even if the network is built for a specific number of users, it should be flexible enough to easily accommodate new users. The cost of doing so is then worked seamlessly into the pricing plan.
It might be a difficult truth to endure, but if enterprise software is valuable, if it does what the software provider says it can do, then people will want to use it. The pay-per-use model is essentially a claim that the software provider stands by their product and believes that given the opportunity, people will not only use it, but encourage others both inside and outside of the organization, to use it as well. As the network grows, so does its value, which should be reflected in the cost of using the software.