Pricing Metrics in SAP SaaS solutions – More diversity than expected

[richard_hirsch]

One of the most important changes in the world of OnDemand software is the use of innovative pricing models ranging from Freemium to monthly subscription fees based on number of users accessing the application.

The variety of factors on which these pricing models are based is amazing.  Such models often include various indicators - range from number of projects / forms created, amount of data provided, number of transactions used, etc - and are combined in easy to distinguish packages that provide the widest audience the opportunity to use the platform.

Note: It is important to distinguish between the features that are provided in different models where the monthly price is based a per user calculation and those pricing models are associated with another factors (number of transactions, forms, etc) and number of users are unlimited.

Pricing Metrics used in Enterprise OnDemand solutions

What about in OnDemand solutions that are more focused on business users?

Salesforce’s pricing is based on users:

Workday’s pricing is more mysterious:

While Workday delivers some social tools and claims to be a social enterprise itself, the software vendor is far from transparent when it comes to software pricing. Workday refrains from disclosing pricing models in favor of letting their sales professionals negotiate such information with prospects during the sales cycle.

However, as a guideline Workday prices its software based on a subscription pricing model that represents metrics for the overall client business, rather than per-Workday-user. This model is based on the total number of employees (or total revenue) and service areas. [SOURCE]

Metrics used by SAP

As I read the various Terms of Services for SAP’s OnDemand solutions, I became very aware of the diversity of metrics that are used in SAP’s subscription-based SaaS offers.

Service	Metric
Precision Retailing	Actual number of mobile coupons activated and registered consumer users during such quarter.
Business Network as a Service	Number of EDI Relations and Invoices
Data Enrichment and Classification	Spend Volume means the total amount of a legal entity’s annual expenditure for the procurement of all direct and indirect goods and services.
EPM OnDemand	Total number of Employees (including contract workers) in Customer’s corporate organization,
Product Safety OnDemand	Number of substances which are maintained by Customer in the Service
Sales and Operations Planning OnDemand	Customer’s corporate group’s most recent annual gross revenue (“Annual Revenue”), as contained in Customer’s annual audited income statement
EHS Regulatory Content OnDemand	Customer’s corporate group’s Revenue, as defined by International Financial Reporting Standards (IFRS).
SuccessFactors Business Execution Suite : Workforce Analytics and/or Workforce Planning Service	Number of Employees in Customer’s and its participating Customer Affiliates’ organization.
Supplier Infonet OnDemand	Number of Employees in Customer’s legal entity.
Travel OnDemand	Number of expense reports processed per year by Customer

POV

What I like about SAP’s diverse pricing models is that they reflect an understanding of the underlying business logic of these particular applications. 

What might be difficult for customers, however, is the predictability of such environments. A per user monthly cost is rather easier to estimate and budget accordingly. If multiple SaaS applications are used – each with a different pricing metric and usage patterns – then those dealing with the future financial impact of such usage might be confronted with difficult calculations.