Article | April 9, 2018

How Software Usage Analytics Helps Vendors Succeed With Subscription Pricing Models

Source: Revulytics

By Keith Fenech

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Last year PTC announced a major shift from perpetual licensing to subscription licensing for all new software licenses in the Americas and Western Europe for its core CAD and PLM software and ThingWorx IoT platform.

In explaining the decision PTC President and CEO Jim Heppelmann said that “In our most recent quarter, over 75% of new software bookings were sold as subscription in the Americas and Western Europe, again validating the value customers ascribe to consuming enterprise software as a subscription.”

Moves like PTC’s point to the fact that the demand for a subscription-based model is an irrevocable force in the enterprise software space. Because many are moving toward a SaaS model (according to IDC, 34 percent say they plan to adopt SaaS by 2021, a rate growing at 20 percent annually), it may be more critical for non-SaaS vendors to offer usage metering and pricing flexibility similar to that of their SaaS competitors. As evidence of that point, “consumption-based” pricing emerged as the preferred model of paying for digital products and services in IDC’s 2017 Digital Business Models Survey.