Why Read This
Poorly designed software pricing can limit sales opportunities, extend sales cycles, restrict upselling, and reduce maintenance renewals. Forrester has identified five qualities of good software pricing from talking with hundreds of software sourcing managers and several leading software pricing VPs. Many software licensing models encounter buyer resistance because they are based on inside-out thinking, stick stubbornly to obsolete metrics, or overemphasize the immediate list price calculation aspect, instead of focusing on defining the license's scope. Product managers can make the sales process easier and preserve upsell potential by designing and publishing a pricing and licensing model that is value-based, simple, fair, and future-proof. Forrester has developed an evaluation framework that will help clients assess the detailed criteria behind these five dimensions to rate their pricing models. This framework will help product managers balance the dimensions' often conflicting demands and create product pricing that potential buyers will embrace.