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3 User-Centric Tips for Monetizing Your Analytics [Guest Post]

By Chris Mele | January 30, 2018
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This post was written by Chris Mele, Co-Founder and Managing Partner of Software Pricing Partners, LLC.

When it comes to monetizing analytics, the golden rule is this: If a product is on your roadmap, you should already know how you’re going to monetize it. Unfortunately, we see most software companies thinking about product pricing when they develop go-to-market strategies, which is far too late.

>> Related: A Framework for Packaging Analytics <<

Rather than happening after the fact, monetization strategies—which include licensing, packaging, and pricing—should be steering your product development (with product management and the Chief Product Officer at the helm).

What’s more, software companies tend to view monetization from the buyer’s perspective, when in reality it is best shaped around patterns of software usage—especially in enterprise sales. End users—not buying personas—are the key to understanding how value is derived from your software and transformed into economic gains. They are the ones who will use your product and are most likely to grasp the role your software plays and the value it brings.

There are two competing objectives at play here: The buyer’s goal is to wrest maximum value from you at a minimum price, while your goal is to be paid fairly for the value of your software. In order to bring these two objectives together, you need to understand the software users.

Here are our top three user-centric tips for monetizing your analytics:

1. Talk to Users

Don’t rely on data analysis and surveys alone. An in-depth conversation with a small representative sample of users is often the fastest route to discovering powerful behavioral patterns and insights. You’re able to see and experience first-hand how users work with your product, how usage is evolving, and how your product fulfills users’ needs. If you don’t understand these dynamics, your packaging strategy will be out of date before you even roll it out.

2. Create Tiered Product Offerings

Not many customers want to buy software capabilities that they rarely, if ever, expect to use. With tiered product offerings, you can pull together capabilities that have similar value and usage frequency for the groups of users you’re targeting. A well-designed packaging strategy that encompasses tiers and add-on products will create strong upgrade and cross-sell opportunities. Plus, creative packaging techniques can open doors to other market segments and geographies.

3. Stay Fluid

Remember that your tiered offerings should not be static. In fact, they should change as customers’ experiences and perceptions of value change, or when you introduce new capabilities. Continue to talk to users and adopt a product management monetization framework to track changes in how your features are used and when they become commoditized.

Software Pricing Partners created our Packaging Decision Framework as a dynamic tool for maintaining this fluidity. You can use it anytime you want to adjust the position of your current software features or when you’re planning to incorporate new features from your product roadmap.

By following these user-centric tips and creating a monetization strategy aligned to customer value early on, you’ll reap the benefits at the go-to-market stage.

To learn more about monetizing your analytics, read this ebook we co-wrote with Logi Analytics: How to Package and Price Embedded Analytics.

About the Author

Chris Mele has more than 25 years of experience as a software pricing and monetization expert. He is the co-founder and Managing Partner of Software Pricing Partners, a consulting firm.

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