WALTHAM, MA--(Marketwired - Jul 30, 2013) - MetraTech , the leading provider of agreements-based billing ™, commerce and compensation solutions, today announced the release of the report, " Monetization that Fits the Business: The Limitations of Subscription Billing ," published in conjunction with research and advisory firm Saugatuck Technology. The report examines the past decade's evolution of monetization strategies driven by the adoption of cloud solutions, and recommends a continued growth beyond subscriptions to yield maximum profits and differentiation. Enterprise customers are demanding bills that are better aligned with their actual consumption. Furthermore, they want the services they consume to be personalized and not simply multiple features bundled by the service provider to justify a single flat subscription price. Billing done right is a strategic business enabler that supports service personalization and stickiness; billing done wrong is a business inhibitor that leads to service commoditization.
Customers and partners often become frustrated when they are forced into cookie-cutter subscription models that are not aligned with how they want to consume services. In fact, many customers want the same underlying service to be subscription- or completely consumption-based depending on their specific use of that service. For example, for compute services, customers often want subscription-based for long running applications in order to predict costs whereas they want 100 percent usage-based for big data and quality assurance loads. However, even in the subscription model they want to be able to support rules-based bursting. Billing has to support pricing models for service building blocks, tailoring, and consumption. Simplistic subscription billing systems that force providers to compromise business models around price, term or product mix leads to service commoditization. Cloud billing platforms must deliver the agility to build dynamic, usage based pricing models and relationship-based agreements with customers, partners, channels and suppliers. Service providers across industries need to provide service transparency as well as the flexibility to adapt, change or tailor service offerings to drive service differentiation and stickiness.
Saugatuck Technology's report details how subscription billing became popular as a simple business model to stem customer defections as software providers moved to the cloud. However, the 12 independent software vendors (ISV) Saugatuck Technology interviewed find this model is insufficient in providing the flexibility and customization customers want. While subscriptions have been a rudimentary model to reduce the incremental cost of products and services, the next logical evolution is to incorporate or move to usage-based, elastic pricing that is relationship based. Service providers need a monetization platform that enables differentiated offerings and also supports channel and partner compensation. Saugatuck Technology recommends solution providers embrace a billing solution that is fully-functional, adaptable and can support any combination of monetization approaches, including elapsed-time rates, tiered rates, bracketed rates, metered-usage rates, day-of-week rates and time-of-day rates.
"While subscriptions certainly make sense in various applications, it is hardly a universal solution for monetizing customer relationships," said Mike West, vice president and distinguished analyst at Saugatuck Technology. "MetraTech's view of commerce is in-line with the future of business. Rather than one-size-fits-all subscription-based models, we are moving toward more personalized multi-party agreements that include a combination of subscription- and consumption-based services, which give enterprises the flexibility they will need to adapt as the company grows."
In the report, readers will find:
- A brief history of the rise of subscription billing;
- Five metrics for measuring revenue models;
- An overview of challenges ISVs face in transitioning to the cloud;
- A case study on how subscription billing limits profitability; and
- Recommendations on how to model and manage revenue.
Esmeralda Swartz, chief marketing office of MetraTech, said, "A business model should not be constrained by the limitations of a simplistic billing system. The right monetization strategy is a business enabler and differentiator. Companies need flexibility to enable ingenuity and innovation -- which then must be monetized. MetraTech is the only billing provider that makes it easy for customers to model services and introduce new services or business models, and then change them rapidly in response to market demands or customer behavior. With the evolution to everything-as-a-service (XaaS), the need for service personalization and bundling of partner services requires a monetization platform that can be flexible and adapt, change or tailor service offerings and support channel and partner billing."
Additional resources:
- MetraTech blog: http://bit.ly/141OHwE
- MetraTech on Twitter: http://bit.ly/162XVXo
- MetraTech on Facebook: http://on.fb.me/14EuIDt
About MetraTech MetraTech Corp. simplifies and enables global commerce innovation, while helping businesses respond to an ever-changing customer and partner relationship landscape. We empower businesses to embrace change through a unique agreements-based billing, commerce and compensation solution that models and supports fluid, personalized, multi-party agreements for customers, partners and suppliers. We automate business processes and business models to address rapidly changing or complex business strategies. Our products are deployed globally, and our customers use MetraTech to innovatively create and securely collect revenue, provide settlement to partners and manage their customer lifecycle in 36 languages, 28 currencies and 150 countries. Customers include Achilles, Arkadin, Bell, Concur, the Depository Trust and Clearing Corporation (DTCC), Cetip, The City of Chicago, GRU São Paulo International Airport, GXS, InterCall, LifeLock, mBlox, Microsoft, PGi, Telia Sonera, TELUS, and TELMORE. The company is headquartered in Boston, with offices in London and Rio de Janeiro. MetraTech is a venture-backed, privately held company whose investors include Accel Partners, Meritech Capital and Vesbridge Partners. For more information, please visit www.metratech.com .
Media Contact: Erin Rohr Metis Communications 617-236-0500 x20 metratech@metiscomm.com
