WEBINAR: Winning Pricing Strategies

for Software, IoT and Digital Goods

April 9, 2015

Housekeeping Rules

1. All lines are on mute

2. Use the Questions Box during the session. Don’t Wait!

3. Questions will be answered during the webinar session

4. Unanswered questions and parking lot items will be followed up after the webinar

5. This presentation is being recorded for later playback and sharing

6. Feedback forms will be provided at the end of session

7. Remember to tweet with #Pricing

Speakers

Amy Konary Research Vice President IDC @mizkonary

Omkar Munipalle Director, Cloud Strategy and Business Development Gemalto (formerly SafeNet) @Omunipalle

Raj Badarinath Vice President, Product Marketing & Alliances Avangate @rajmatazz

Acquired by Francisco Partners in 2013

Avangate Quickfacts Over 4,000 Customers

50% Annual Growth

Global Team of 230+

Established in 2006

Focus on Software and XaaS

Bay Area Headquartered

Powering Modern Digital Commerce.

Digital Businesses Are Evolving Monetization, Business Model, Go-to-market

Transitioning to New

Revenue Models

Managing the

Commerce Lifecycle

Value is in software, not

the device

Software

Services

Internet of Things (IoT)

Old eCommerce approach

Online is a channel

Drive transactions

One-time sale

International over time

Product separated from commerce

Acquisition only

Single pricing model, static

Digital Business today and tomorrow

“Digital” is the business

Build customer relationships

Expand usage and drive continuous monetization

Global from the start

Go-to-market embedded in product

Acquire, activate, renew, upsell

Multiplicity of models, iterative

Yesterday v/s Tomorrow

Maximizing Recurring Revenue

Amy Konary

Research Vice President

April 2015

Key Dynamics

Subscription

Subscription35%

of total WW

software

revenues by 2018*

Mobility

More cellular

connections

than people by

2015 (source: Ericsson)

Cloud$1 of every $5

spent on

software

consumed via

the cloud by 2018

Excluding maintenance

Source: IDC, 2014

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 3

Transformation

Usage-based

pricing grows

34% in next 18-

24m

Subscription business models are transforming every industry

What are we trying to enable?

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 5

1. Align price with experience

Product/Service

Defined by access

Consumption

Defined by interaction

Outcome

Created through interaction

Software Pricing- 2015

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 6

Perpetual License Fees (65%) Subscription (35%)

WW Software License Revenues $276B

3% CAGR 14% CAGR

Sim

plic

ity

Fle

xib

ility

Pricing Models

Access Consumption

Source: IDC Subscription Forecast, 2014

Access

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 7

Pros

Predictable/easy to forecast

Scales up and down

Familiarity

Low-hanging fruit

Easy compliance

Cons

Price/value not always aligned

Apps vs. infrastructure

Low vs. high usage

Not all access is =

Increase # user types

Increase complexity

Metering access is not the same

as metering consumption

Metering access is not the same as metering

consumption

Metering Access

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 8

Consumption

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 9

Pros

Efficient way to buy

Scales up and down

Supports incremental adoption, or

experimentation

There will likely be a role for access

models even when consumption is

involved.

Cons

Metrics not always obvious

Hard to predict

Not as familiar

Hierarchy of Pricing Flexibility

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 10

Subscription

Metered

Access

Consumption

Outcome

What is a

successful

outcome?

Size= cost

of

equivalent

unit

Challenge

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 11

“…messy organic growth, seven customer data stores,

three independent payment collection systems,

customers passed between different contact centers, no

centralized view of the customer.”

“how do we enhance and maintain our customer

experience while changing every fundamental aspect of the

technology that supports our subscription business without

damaging our customer experience?”

Best Practices

Flexibility

Complexity

Simplicity

Rigidity

We meet

whatever needs

our customers

desire

We need to

make it

simpler

We decided to

go “all in”

We realized a

one-size fits

all approach

doesn’t work

SY

ST

EM

S

Total Solution for Digital Business

Gemalto quickfacts

Sentinel Product Family: Trusted by more than 10K customers

CRM Marketing

Automation eCommerce/ In App

purchase Billing Payments

Digital Business Architecture

Security

Digital Product / Service

Usage

Information Entitlements Package Setup

Cu

sto

mer

In

tera

ctio

n

Mo

net

izat

ion

Co

mm

erce

Online / Direct Channels Indirect Channels

Flow

Product Catalog

Orders & Payments

Billing and Invoicing

Post-paid Payments

Package Setup

Provision Entitlements

Usage Monitoring

Software

Provider of analytics for

large enterprises

Seamless and automated

quote-to-cash process

Support subscriptions and

recurring revenues

Enable upsell throughout

the commerce lifecycle

Sample Customer Use Cases

Online Service

Provider of online legal

services

Full commerce life cycle –

online customer Acquisition

Enable a segmented

market offering – Product

packages

Authorized access to

entitled assets

Low friction renewals

IoT

Medical Devices

generating revenue through

S/W

Employ pay per use model

to enable and track different

feature utilization

Automated invoicing and

billing

Capture incremental

revenue through upsell

Amy Konary, IDC @mizkonary

Raj Badarinath, Avangate @rajmatazz

Omkar Munipalle, Gemalto @Gemalto

Questions?

#Pricing

Avangate B.V. Amsterdam, The Netherlands Tel: +31 20 890 8080

Avangate Inc. Redwood Shores CA., USA Tel: (650) 249 - 5280

info@avangate.com www.avangate.com

Thank You.