Is Per Seat Pricing Right for the UC Market?
With the consumer market moving back to pay-as-you-go, why are UC vendors still charging per seat?
We live in a subscription based world. In 2019, you can listen to music on demand, watch TV on demand and even order your dishwasher tablets to your door on a quarter by quarter basis. So, when it comes to Unified Comms, have vendors got it right with the per seat pricing?
Treating businesses like humans
Recently, I’ve been doing a lot of relating business marketing and business user experience back to consumer marketing and consumer user experience. Every conversation I have about branding or marketing seems to go back to the notion that there is a human behind every business.
Unify seems to have got this spot on with their marketing – finding your collaboration persona and tailoring a solution to the way you work is much better than technical data sheet that nobody reads.
Procurement is changing
Why is this relevant to per seat pricing? The way we buy everything is changing. As a technology that is leading the way businesses communicate and collaborate, Unified Comms must be reactive and dynamic across the board. If enterprises are buying something in bulk, they generally get a discount. There is relevant to the Unified Comms market, as well as many others. However, the number of unused seats and licenses often goes unaudited.
Tools are available to report on usage and redundancy. Unified Comms providers know this themselves but have been poor to communicate this. Is this because they would rather have more seats rolled out to a customer, bringing in recurring revenue? No. It’s because it’s not sexy. It doesn’t take the customer on a journey. It doesn’t make the blog and it get missed off the datasheet.
The story to be told is a massive one. If you use 14,000 of your 15,000 seats per month, that’s 1,000 seats unused that you are paying out. If vendors actively promoted the analytics available in the back or front end of their Unified Comms solution, small businesses to huge conglomerates could be taking advantage of flexible billing and the ROI case studies would come flying in.
Relating back to the consumer experience, we use Netflix, Amazon Prime or Now TV because it’s cheaper to pay £10 per month for access instead of £5 per film. So why isn’t the Unified Comms industry following suit? How about customers pay £2,500 for access to a Unified Comms platform – or whatever relevant – and top up with usage for calls etc as normal. There is definitely a technical reason behind this – but one that we should have worked a way around by now.
I reached out to some key players in the wholesale and reseller market to get their opinions on whether per seat pricing in Unified Comms was dated or still the right way to do business.
Justin Blaine, Channel Sales Manager at NTA, told me this: “The customers mindset has shifted from wanting ownership to paying for a PaaS or SaaS solution on an ongoing basis, this gives them the added advantage of not having to maintain and make changes with expensive inhouse resource as they can now rely on their partnership with their ICT provider”
Justin continued, “I think customers just want the service to work, not have to look after it, pay for upgrades and ongoing maintenance and invariably want one number to call when they have a problem”.
“It is imperative that Resellers continue to educate and train their sales teams, after all they are the trusted advisors, they should be aware of competitors products and services and be totally armed with the right product suite and wrap around services”
Blaine’s observation is “ In my mind price is brought up in the sale when the customer is not convinced of the value of what you are offering, or in fact recognises how you are solving the issues they have, which effectively means the sales process and understanding of the customers’ requirements and the agreement of every step of the way of how you are resolving their problems has not been followed and agreed upon, which in turn points back to the sales process being poor”.
Jason Byrne, VP of Product and Marketing at Netsapiens, got his team together and provided me with the following views and data:
80% of Global Workforce is Deskless
- The top 8 deskless industries: Agriculture, Education, Healthcare, Retail, Hospitality, Manufacturing, Transportation, and Construction, employ 2.7Bn employees
- While traditionally these industries have been laggards in tech adoption, we are at a tipping point
- We are seeing momentum build as millennials now make up most of the workforce
- The pendulum is now firmly in the hands of the customer where per seat pricing does not work
Jason said that vendors are now being hit on several fronts here:
- The service providers’ customer no longer wants to consume on a per seat model; they need the flexibility to support the whole employee base who are likely not at a desk
Vendors have handcuffed Service providers from chasing the much larger addressable market of 80% and thus stifled growth.
- Service providers are now shifting their business model to match how their customers want to consume; that is session based pricing (active calls irrespective of if you are at a desk or not)
- This is one of the reasons why Netsapiens has been growing at 3x the UC growth rate for several years
Ultimately, Jason and Netsapiens believe that charging by the seat blocks you from selling to 80% of the workforce, isn’t it time to shift to session based pricing.
Is per seat pricing right for the UC market?
It’s hard to draw a conclusion, that’s for sure. Each business will have a unique set of requirements when it comes to Unified Comms. These usually comprise features and functionality and are heavily packed with technical requirements. The forgotten subject is almost always payment and consumption models. And that’s either because nobody likes to talk about it, or nobody knows any different.
The opinions voice in this post are all extremely valid. Per seat pricing will always have its place in Unified Comms, I’m sure. However, I think it will only take one drastic change and massive cost efficiency to change the way businesses are paying for their Unified Comms.
Over to you, vendors.