business models are marked by an overwhelming pricing model flexibility that often scares software vendors.
This often ends up in contradicting and weak pricing models, which are simply wrong for that service.
Many software vendors still believe that their Pricing Strategy begins and ends with the pricing page they developed
on the basis of what they think is the value of their service. Wrong!
Defining a price is about finding the balance between the ability to solve a problem and the compensation for that help.
The pricing model will determine the market position of a product, the ideal target and the level of service customers will require.
The Usage based pricing model relates the cost of the product to the usage: the more you use the service, the more you pay. This model typically works with data services, cloud storage services and recurring billing services. Atidhi Innovative solutions reduces barriers to use and correlates price and usage.
User Based Pricing is one of the most popular pricing models for businesses. It is really easy for customers to understand this pricing: the more users they add to their account, the more they pay. It is appreciated by businesses, because it makes it easy to forecast revenues. On the other hand, often customers avoid adding new users to keep costs low, and by limiting the adoption of the service within the company it increases the chances that they will change product at some point.
One of the limits of the User Based pricing model is that customers tend to avoid adding new users so that they do not have to upgrade plan, but this makes churn too easy. The solution is the Per Active Users pricing models: customers can add as many users they want, but they will be billed only for active users.
The Per Feature pricing model has different pricing tiers according to the functionalities available in each plan. The more features you need, the more you pay. Usually this kind of limitation is a strong upgrade incentive, but vendors need to get the right balance between the features.
The Freemium Pricing Model offers a basic free-to-use product, supplemented by additional paid versions. Typically, it encourages users to upgrade using feature-based/capacity-based or use-based limitations. Even if it is a good way to persuade customers to use your product, software vendors should consider that free users do not generate revenues and they could move to another product as soon as they find a similar service that offers more features/capacity for free.
The Flat Rate Pricing Model is probably the easiest pricing model: vendors offer a product with some features at a defined price. Usually it is billed monthly or annually, with a discount on annual subscriptions. Even if it is really simple and clear, it does not offer any kind of customization and is now getting less popular among businesses.