Flexible subscription pricing is the best solution for gas turbine maintenance monitoring software, such as TMMonitorTM. High-tech companies and vendors are shifting from up-front to a recurring-revenue model for hardware and software – for solid reasons.
To list the reasons for having a subscription model (as opposed to an up-front model/pricing) is actually listing reasons of the model’s benefits for our customers. Here they are:
- Flexibility. The flexibility of the recurring-revenue model frees capital, since there is no need for big up-front investments.
- Costs are easy to budget and they directly reflect the business value they derive.
- Lifetime value for our customers from continous software development to meet actual clients’ actual needs. It is important that the software keeps adding business value for the customer, not become “shelfware.”
- Fit for business units that prefer operational over capital expenses.
- No need for big advance investments, so suitable for businesses with cash constraints as well.
- Subscribing can make room for experimentation when and if the customer is not certain which software would best serve the purpose.
- Software as a service is the right long-term strategy for most companies, regardless of the industry.
- Migrating to a subscription contract gives the opportunity to clean up complex perpetual contracts, eliminate unused licenses, and negotiate the new subscription contract to align with true business needs.
The benefits of the subscription model can be summed up as flexibility, simplicity, and cost-effectiveness. They have resulted in a significant increase in the number of IT decision makers preferring on-premise subsciption software. 82% of market demand was for on-premise subscription software in 2017. The corresponding precentage was 72 in 2015 and as low as 63 in 2013.
Top reasons customers cite for preferring subscriptions over perpetual offerings:
| Flexibility to adjust capacity | 60 % |
| Smaller up-front investment | 50 % |
| Reduction in total cost | 45 % |
| Flexibility to discontinue subscription | 40 % |
| Alignment of costs with value capture | 35 % |
| Transparency and simplicity in pricing | 15 % |
| Preference for operating over capital expenditures | 10 % |
(Source: B2B software-purchase decision-maker survey, McKinsey&Company.)
Are you ready to make the smart choice and swap big up-front investments to flexible subscription pricing? If so, contact us today! If you want to know more about TMMonitor, ask for a free webex tutorial.