53% of software companies will move to subscription models by 2023

Transform Technology Summits begin October 13th with Low Code/No Code: Enabling Enterprise Agility. Register now
According to Revenera's report, more than half of companies plan to switch to subscription models within the next 18-months. However, it is not enough to have a single strategy for monetization and deployment to meet the varied customer requirements.

Software buyers should consider the high demand for hybrid monetization models. The dominant monetization models used for more than 51% are subscription (36%), and perpetual (24%). Subscription and usage-based models are expected to grow rapidly in the next 12-18 months. Respondents anticipate increased usage of 53% and 37%, respectively.

What is driving the change?

In the last two years, 62% of respondents reported that the most common reason to change software monetization models has been to establish a recurring revenue model. Organizations that plan to modify monetization models do so to enter new markets or vertical markets (62%). Product managers are more active in seeking out new vertical markets (72%). The top motivators for changing licensing policies are to provide temporary evaluation/try-before-you-buy (reported by 41%); add/improve automated enforcement (39%) and add new pricing meters (34%).

Software suppliers should still strive to align price and value.

Only 30% of respondents believe that pricing and value are completely aligned. However, monetization models that are closely tied to usage and engagement metrics show a higher level of confidence. 61% of companies that are able to gather usage data well feel that pricing aligns with value.

The Revenera Monetization Monitor - Software Monetization Models & Strategies 2021 report was created to determine how technology companies monetize and plan to monetize their software. The survey was conducted by Revenera between mid-April and mid-June 2021. The 374 survey respondents were director and above (33%), manager/team leader (33%), and individual contributors/consultants (34%).

Revenera's complete report is available.