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SaaS Pricing Trends: Cause For Concern Or The Evolution Of New Models?

by Naresh Sarwan on June 16, 2010

In this article by Larry Dignan on the ZDNet blog, he analyses some practices by vendors that increasingly look like a return to the standard software licence and maintenance deals that enterprise software vendors are more associated with.  In particular he notes multi-year lock-ins are often pushed by SaaS vendors in order to gain predictable revenue streams:

It’s an open secret in the IT industry that SaaS companies often are pushing multi-year deals that more resemble the licensing arrangements by on-premise vendors. On the surface, SaaS providers get predictable revenue streams and customers also get costs they can easily forecast. This predictability matters for large enterprises and the SaaS vendors increasingly catering to them. The big questions: Is this really SaaS pricing as initially conceived? And will SaaS buyers be screwed? After all, the vision of SaaS is that we’d all subscribe to our software and have the freedom to come and go as we please. Multi-year deals mean that you’re a bit locked in—sound familiar?” [Read More]

The article continues by also outlining a “Cloud Services Agreement” used by some vendors, most notably Customer Service Application provider: RightNow.  We would be interested to hear from customer or DAM SaaS vendors about any similar agreements they provide.

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