What’s the real impact of consumption based pricing.

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I’ve spent the last few days in Maroochydore at the annual IT-Journo gabfest put on my MediaConnect. It’s been years since I’ve attended this forum and picked up a couple of interesting ideas..

Firstly that there are so many start-up Australian companies doing some fascinating things. Zero was there which was a bit weird as I’d just seen them in Melbourne as they were next door to an EMC event in Crown. The reason I remembered them is their tag line is “Beautiful accounting software” which to me an oxymoron like ‘military intelligence’. They provide a cloud based system, but what is interesting is their approach to partnering… they publish an API to allow others to add services onto their core platform. This has attracted a raft of other organisations to differentiate their service by building an add-on.

Secondly, and a little more subtle, was what a guy who sells ‘subscription’ technology. (The stuff people who set up a subscription based business use to transact.) What he said was, “The move to consumption based pricing is a move from product to relationship.” I know I’m slow but this was an aha moment for me!! I suddenly realised that this trend is not just a different way to pay for something, (which is the way that a great deal of IT companies have viewed it), but the beginning of a new business model completely. Now we all understand the change to consumption moves the focus from features to outcome, however how does this play our in the future.

So in my mind the question is that if I subscribe to a service that meets my needs today, and my needs evolve over time, should I expect my current supplier to evolve their service? I’m guessing that the successful ones will and they will be the winners. Let’s face it perhaps this is the biggest issue with traditional outsource arrangements where the requirements and the contract slowly drifted apart… leaving both parties unhappy!

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One response to “What’s the real impact of consumption based pricing.

  1. Pingback: Techday – All hail the subscription-based business model

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