vs. BMC Remedy · 2005–13
ServiceNow
Run it as SaaS on one code base: no upgrade projects
- What it did
- Sold over the internet at $25 per seat per month (2005)
- BMC Remedy
- Client/server products hosted in a data center and called SaaS (2010)
Strategy Map›Layer 5 · Go-to-Market Strategy›Monetization Strategy/Who pays, and for what+ from outside the named canon
Subscription Pricing
What is Subscription Pricing?
The company charges a recurring fee for continuing access where the alternative (its own earlier model or the incumbent's) charged once per purchase, per license or per use.
How Subscription Pricing works
Recurring access replaces a large purchase with a smaller continuing one, lowering the first commitment and making revenue continue with use.
How companies won with Subscription Pricing
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
vs. Blockbuster · 1999–2007
Netflix
Rental by mail from a website, on a no-late-fee subscription
- What it did
- Discs ordered from a website, mailed from a queue, kept with no due dates or late fees (Sept 1999)
- Blockbuster
- Collected $800 million in late fees (2000); dropping them gave up about $400 million (2005)
vs. Oracle · 2006–12
Workday
Counter-positioned against Oracle's maintenance base
- What it did
- Per-user monthly subscription instead of $100,000-to-millions up front (2008)
- Oracle
- Maintenance at 22% a year earned $12B vs $11.5B in new licenses (2009)
vs. Siebel Systems · 1999–2005
Salesforce
Monthly subscription Siebel could not match without eating its licenses
- What it did
- $50 per user per month for '90% of the features' of Siebel's flagship (1999)
- Siebel Systems
- Free Sales.com held back to protect $600M+ in license revenue (1999)
Also tagged: Adobe · Ancestry.com · BigCommerce · Blue Apron · Dayforce · Hims & Hers · Match.com · Microsoft · MoviePass · New Relic · Peloton · PTC · Rubrik · Shopify · Spotify · Teladoc · Toast · Ultimate Software · Zipcar · Zscaler
The question to ask of a company
What did customers pay before, and what does the recurring fee now buy them?
Who names it
| Author | What they call it / where it appears |
|---|---|
| Tien Tzuo + | The subscription economy |
Note. Near miss: A SaaS product that has always been monthly, in a category of monthly products. Does not count: A company born as a subscription in a market that was already subscription-priced.