Long time no see It's been a year since Salesforce helped transform the technology world by claiming to be the end of software. That model of selling access to managed services hosted on the cloud (what we commonly refer to today as software-as-a-service (SaaS)) didn't end software, of course. , took the world away from purchasing software. box.
The trade-off was easy. Software offered as a service has a lower initial cost, but can become more expensive over time. In return, the vendor promised regular updates and there would never be an out-of-date version. Regardless of how you feel about the subscription economy, the transition from buying Microsoft Office in bulk to renewing your Microsoft 365 subscription online is now a thing of the past.
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Salesforce's model of selling access to software services on a subscription basis was incomplete. As with all business models, some people have realized that while SaaS and its ilk are tidy profit centers for vendors, their costs ultimately don't align with the buyer's needs. There was a possibility that it wouldn't. For example, if you pay for more seats than you use, or if you use less of the service on some of your paid seats, you could end up paying more for software than you actually need. .
Enter usage-based pricing. This charges you for the software based on how much it is used. Some thought that pay-as-you-go pricing would be next, just as SaaS products did away with the old software sales model. In fact, behind the scenes, Twilio has grown to enormous size and paved a Salesforce-like path for startups. From “quit the software” to “ask the developer,” the future of software pricing seemed up for grabs, especially during the last venture boom.
Then the economy improved, and technology companies suddenly had to accommodate customers demanding lower rates. Based on my reading of SaaS companies' quarterly reports, it appears that while all software companies have had to do some soul-searching since mid-2022, consumption-based models seem to have been hit the hardest. . Maybe that's why the founder of Salesforce is still CEO, but the founder of Twilio is not.