Software Pricing Strategies for the Channel
In the current software marketplace, many vendors are moving to a multi-level software pricing strategy: They may continue to have a higher-priced one-time license software product, but are also trying to take advantage of the move to various services business models to create a lower-end subscription-based product to reach a broader customer base. There may be multiple such products. And often the service or subscription-based product is sold and marketed through the channel or partners.
How does one define an effective pricing strategy to make sure you're capturing as much as possible of the available market, while at the same time minimizing any channel conflict?
How do you create a win-win situation so that as the software vendor you can maintain your brand equity in your customer's eyes, while at the same time the hosting or SaaS vendor may have the primary end customer relationship?
Channel conflict happens when a new sales avenue for software or services threatens to cannibalize existing sales channels for essentially the same product or service. For example, a licensed software product direct from the software vendor, versus a software service from a SaaS provider. There could be other channels you utilize for your software product also, such as VARs, OEMs, retail, etc. Channel conflict can cause significant loss of profit margin for both you and your channel partners.
To avoid this, it is important to proactively develop a comprehensive pricing strategy prior to venturing into new channels. You should do this by: