The CMX business and pricing model is based on delivering its software as a “service” (SaaS). This model has gained rapid adoption because it provides long-term benefits to both software providers and their customers.
Software providers are able to leverage their software and infrastructure investment over a larger number of customers and minimize their customer-specific set-up and support costs. By spreading this investment over a large number of clients, software vendors can make their software available to both small and large companies alike.
Software buyers also gain a number of benefits with a PaaS model. Customers can start small and easily add users with a “pay-as-you go” licensing model. A customer’s upfront cost in getting started (software and hardware procurement) is eliminated and their time-to-market is accelerated. Application performance, maintenance and support are also improved when performed by the vendor. Not to be overlooked is the added benefit that software buyers receive as software providers innovate and evolve the platform. Additionally, they indirectly gain the benefits of “peer-group-innovation” as other customers of the software provider drive change and improvements through the platform.
Typical SaaS pricing
The diagram below depicts a hypothetical single user license under a SaaS based licensing model. A percentage of each end-user license is associated with corresponding costs, resulting in a target percentage profit for each license sold for the vendor. Of course many factors will influence the actual percentages allocated to each category; for example: initial investment, debt service, RD expenditures and number of clients vary from business to business.
The SaaS pricing model has many proven advantages for both buyers and sellers, however not all software buyers see this model as favorable in the long-term. Specifically, some would argue that over time, the initial investment to build the software is reclaimed, resulting in increasing margins for the seller, to the disadvantage of the buyer. On the surface this seems to be a well-founded argument, however to fails to take into account ongoing RD and re-investment in the software and infrastructure. Quantifying this continued investment in terms of value to the seller is a nebulous task and remains a topic of debate. CMX has chosen to approach this problem with a unique value proposition.
CMX has developed its pricing model to support its business model as a SaaS provider. However, CMX is not typical in the value that it offers to its customers. While most SaaS providers charge ever increasing license fees based on additive functionality, CMX licenses are not restricted by “what” or “how” they can be used. CMX clients have unrestricted access to pre-built applications and unlimited ability to add new applications as their business demands change. This model encourages and rewards customer adoption as the ROI increases (and average cost of ownership decreases) with increased utilization.
Software-as-a-Service (SaaS) is a unique technology model and it’s here to stay. It enables buyers and sellers to focus all of their resources on their core competencies, resulting in greater overall value for each party. However, not all SaaS providers are the same and not all SaaS pricing models work for every situation. CMX has engineered its technology and business model to encourage client adoption through a permissive pricing model that rewards increased utilization. Simply put, as customers find more ways to leverage the technology by adding applications, return on investment increases.