Why usage based pricing for DronaHQ?
Pricing is one of the most complicated thing in the world of SaaS and maybe in any other business. Idea is to arrive at an optimum point where a customer gets max value while the service provider gets an optimum worth for providing the services. In simple words – value based pricing.
Salesforce paved the way for the SaaS industry by its innovative model of pricing by user/month. Its popularity quickly made SaaS pricing based on number of users like a no brainer. In today’s time – SaaS itself can be bifurcated now into multiple category of products/tools –
- Point solutions (CRM like Salesforce, HRMS like Workday, ServiceNow etc)
- Developer tools as a service (#AWS, #Sendgrid, #Twilio, #Zapier, etc)
- New emerging category of dev tools – LowCode/NoCode tools (DronaHQ, Retool, Internal, PowerApps and many more)
For point solutions – its relatively easy to peg value to the service on a user basis.
Say in SFDC case – here is a productivity tool for sales reps and price per seat is 0.5-2% of their monthly salary and it will help them manage 3x the pipeline with SFDC.
Now let’s flip to Dev tools – Interestingly vast majority have their pricing model based on consumption of their services. Example – Twilio would price basis SMS, minutes, Sendgrid plans are basis quantum of emails to be sent and AWS on minutes of compute.
Why usage based plans make sense?
Say in the case of Sendgrid or Twilio, some user may subscribe to the service to send just a few 1000’s emails while some may use it for a few millions.
- Dev tools are providing two things:
- SDKs/IDEs/Library’s to help developers build things
- APIs or Run time services to run the services
Price is a function of cost and with tools providing run services – quantum of usage has a directly proportional impact on the cost. Given the wide variety of use cases that developer based tooling services can cater – it is imperative that usage of service will vary basis the use case. By the logic of elimination of choice – usage based pricing enables these tools to let customers decide their pricing basis usage.
Low code tools fits perfectly in the category of dev tools. And the use cases that can be catered is even more wide. For instance you may just want to build a simple admin tool & someone else may want to build an entire inventory management tool. Given the variety on use cases the best way to arrive at a win-win solution is by basing the pricing on consumption. So if you are using less then why pay more and vice versa.
At DronaHQ we calculate usage purely basis the server side compute done for the customer. Server side compute would mean executing a workflow or calling any APIs or invoking any connectors. In our world – this currency is called as task.
Just to ensure you understand this fully we have two kind of computes – frontend and server side. And we do not consider frontend side compute in our usage metering.
While we are one of the very few full fledged low code service provider to go the path of usage based pricing model – we are confident that our customers will find it a value for money proposition.
What are your thoughts? Let me know in the comments below.
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