Why a Cloud Marketplace Service Provider Has to Offer Several Pricing Models

As the cloud market evolves, it’s only natural that the price models evolve as well. When a vendor uses a cloud marketplace service provider, they expect a turnkey service, but also unlimited flexibility.

It may sound like a Catch-22 situation, but it’s really not.

Allow me to explain.

The cloud marketplace service provider has to empower vendors and developers with all the tools they need to showcase their products and attract the right customers. That includes the technology needed for deployment, billing, access, identity and more, but also the marketing support and a set of good practices.

At the same time, the vendor needs to have enough flexibility to set their own price and create their own bundles to attract customers and turn them into loyal ambassadors.

And no one is saying that cloud marketplace service providers should impose prices (if your provider tries to do that, you should look elsewhere!). There is a significant difference between providing a pricing model and imposing a price.

A price is the amount the vendor charges for the products they are selling. A pricing model is a template, a structure to which the vendor can add their own numbers or prices.

Some of the most frequently used pricing models in the modern era are:

  •         Pay-as-you-go model: the user is billed based on usage or when they use the service.
  •         Subscription model: users are billed weekly, monthly or yearly. Even if they don’t use all the resources, they will pay the same amount.
  •         Pay-for-resource model: the more resources used, the higher the bill. The users only pay what they consume.
  •         Value-based pricing model: the prices are set primarily according to the perceived or estimated value of a product or service to the customer.
  •         Cost-based pricing model: the price is set according to the cost of production.
  •         Competition-based pricing: the price is set according to the competitors’ prices for a similar product.

These are just a few of the pricing models available for vendors. Even more, most of the pricing models are hybrids between two or more of the ones above.

Since all these models come with ups and downs for both vendors and users, a pricing model offered by the marketplace provider is crucial.

Let’s take a look at the main reasons why.

1. Pricing Models Can Be Unfair or Spark Controversy

Amazon recently announced that they would start billing users per second for their most popular cloud service. The suspicion about vendor lock-in appeared almost immediately.

Keep in mind that this is Amazon, the biggest player in the cloud industry. And still, their pricing model sparked controversy. A cloud marketplace service provider can offer a pricing model that will shed vendors from similar problems.

2. Users Expect Flexibility

Ultimately, offering several pricing models to guide vendors and resellers is ultimately a way to help them keep their customers happy. You can choose a different pricing model for each of your services, thus ensuring that your customers get the very best deal every time.

It is up to you as a vendor to know which pricing model is more appealing for each item you sell. However, the marketplace provider should always offer you a starting point in your research.

3. Cloud pricing Models Are Very Complex

Finding the sweet spot between user satisfaction and vendor profits is quite difficult. The same goes for making it easy for users to understand what they are paying for.

Unlike some distributors and VARs, cloud marketplace service providers know the ins and outs of pricing models. Coming up with a pricing model can help vendors make the most out of their products with a minimal time investment.

At Cloudesire, we strongly believe in supporting our partners every step of the way. This is why the pricing models we offer are just a small part of the support each partner receives every day, even after they are on boarded. Learn more about how we can help you boost your revenue here.

Need to know more about SaaS pricing models? We’ve got you covered -- check out our blog post on the 7 best pricing models for SaaS businesses.

 

Download eBook  SaaS Pricing Strategies

Topics: