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Posted by Liz Herbert on March 4, 2010
SaaS has long promised the concept of usage-based pricing, elimination of shelfware, and long-term commitment to value and total cost of ownership (TCO). But some clients have questioned how true this is in practice. With more and more clients signing longer deals of 3-5 years in length and sometimes struggling to get an exit clause, clients question whether they can truly pay for what they use – and eliminate or redeploy unused subscriptions.
Today RightNow Technologies announced a Cloud Service Agreement that addresses these concerns, allowing clients to:
- Buy according to annual usage needs that may vary month-to –month. Firms can buy for the usage they expect to use over a year’s time. This helps firms with seasonal spikes in usage, who may need additional seats at certain times of the year – such as extra staff during the holidays for retailers. Firms don’t need to pay for the additional seats in the months they go unused – since the agreement is based on annual usage and will account for the spikes.
- Scale seats up or down every year. RightNow analyzes usage annually, and allows companies to flex subscriptions in either direction if needs have changed or did not match expectations at initial deal time. One caveat? Firms should beware that the price per seat is subject to change based on usage bands, but at least in the RightNow model these bands are defined in the contract.
- Opt out of their contract – with no exit fees. Firms also have the option to cancel their contract on an annual basis if they decide RightNow is no longer a solution they wish to use. RightNow is taking on a lot of risk by guaranteeing pricing for initial 3 year contracts with option to lock in for 3 additional years yet still allowing companies to opt out of that contract every year.
RightNow’s flexible cloud contract is good news for SaaS buyers. Firms should ask their other SaaS vendors for similar terms and expect leading SaaS providers will follow RightNow’s lead.
Please share your thoughts and experiences!
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