Subscription software and services are often viewed as an inevitable corollary to shifting to the cloud. But how can you work out what to charge when you move to that muddle and how to collect payments? The experience of Australian puzzle publisher Lovatts Media provides some insights.
Lovatts' business relies on two distinct areas: publishing its own puzzle titles in print and online, and selling puzzles content to other publishers. In that second (B2B) market, it is utilising cloud subscription service Zuora to automate its processes and payment systems. But when it comes to setting pricing, sales and marketing manager Lane Russell says it's very much a case of determining individual prices for each customer, rather than sticking with a one-size-fits-all model.
Because dominant SAAS providers such as Salesforce.com typically have fixed per-user pricing for all clients, that's often seen as the best model for subscription services. However, for Lovatts, the pricing needs to reflect the reach of the client and the need for content to be customised, Russell said at a Zuora media lunch in Sydney today. For instance, pricing might be different for the Flash versions of its puzzles compared to the more broadly compatible HTML5 versions.
For its consumer products, Lovatts utilises PayPal for digital payments (though it also allows payment through paper-based methods such as cheques and money orders, and cheques still account for 30 per cent of business). PayPal has higher charges than many individual merchant accounts, but Russell described it as "a necessary evil". Having only a single payment gateway also made financial reconciliation easier, he said, which made the higher charges less of a problem.