Consumption-Based Pricing Is Emerging From Leading SaaS Providers, but Beware!


Published: 17 February 2017 ID: G00321064

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Summary

Consumption-based pricing is often assumed to be synonymous with cloud offerings, but has been absent from major SaaS vendors' offerings. Sourcing and vendor management leaders can take advantage of consumption pricing from leading providers to reduce costs in SaaS purchases.

Table of Contents

  • Analysis
  • Impacts and Recommendations
    • Digital business and cost optimization trends are the impetus behind leading SaaS providers offering consumption-based pricing as an option alongside current standard models, providing new opportunities to better align cost and value
    • The success of pay-as-you-go models in public hyperscale IaaS offerings is forcing SaaS vendors to respond to growing customer demand for similar pricing flexibility in SaaS models
    • Consumption-based pricing, while offering greater flexibility, will likely be more expensive per unit than committed volumes, and so must be carefully analyzed and limited to the most appropriate, cost-effective scenarios
    • Consumption-based pricing will force some SaaS pricing metric changes for existing customers, as some SaaS metrics are not well aligned to usage-based charging
  • Gartner Recommended Reading
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