Revenera Monetization Monitor

Profitability is in sharp focus for technology companies, as ‘growth at all costs’ mindsets fade. These businesses are offering greater flexibility to win market share and boost retention.

The picture is clear: suppliers need to provide the software monetization models that meet customers’ needs, deliver business agility, and combat the risk of subscription fatigue. Subscription/term continues as the leading monetization model among companies that use one model extensively; it’s also the monetization model anticipated to grow most as a percentage of overall software license revenue in the coming year and a half. Outcome- and usage-based models are also anticipated to grow.

Deployment approaches merit close attention. SaaS, growing in popularity, is the most widely used deployment model, with 86% using it at least moderately (including 27% using it extensively). Nearly 3⁄4 of respondents transitioned multiple products to SaaS; 85% transitioned or are transitioning software products from on-premises to SaaS deployments. But SaaS faces competition from private cloud deployments: 82% use it at least moderately (including 33% using it extensively) and it is the deployment model showing greatest anticipated growth.

Software business growth requires consideration of the full software monetization landscape. Software suppliers must focus on insights from software usage data to improve the alignment between price and value, speed time-to-market, and meet revenue goals. Adaptations to product marketing and pricing strategies are essential to offset increasing expenses, while driving profits, recurring revenue, and SaaS profitability.

Incorporating and monetizing artificial intelligence (AI) offerings also puts pressure on suppliers to monitor surging cloud costs and identify plans to effectively monetize AI. Streamlined operations and insights into things like software usage can help improve revenue and profits. Suppliers also have the opportunity to introduce new models, such as token-based monetization, that can provide insights into the appeal of different models and can meet customers’ current buying preferences.