CPaas Pricing Evolution

With the growth of CPaaS (Communications Platform as a Service) and implementation of so many new channels and features, pricing is changing for mobile messaging.

The year?2021 will likely?show some interesting movements in CPaaS pricing. Beyond?CPaaS?software and portal?licenses,?much of the revenues are driven from the?traffic from CPaaS channels?namely Mobile?Network?Operators?(MNOs)?or?OTT?players,?also called Channel Owners.?

Application to Person (A2P)?or Person to Application (P2A)?messaging?prices?have been mainly?local and?relatively?static.?SMS is enjoying an incredible market share due to its?reach and?end user?opening rate.?Following a?review of all?European?markets, SMS represents?85%?of the?revenues of the?A2P market.*?But, by?the?end of 2021, MNOs will have?to price RCS alongside SMS?taking into account the growth of new use cases such as customer?service.?RCS, or Rich Communication Service, offers?rich media and content?(images, videos, carousels,?calendar?events, locations), branding?(authenticated logos), and conversational aspects.?OTT includes other channels like WhatsApp, Viber,?Facebook Messenger, Line, and?KakaoTalk.?

Price Dimensions

At?LINK?Mobility, we believe that prices will become more dynamic as other?messaging?channels?strengthen?and use cases widen.?Pricing decision makers, such as OTT players and MNOs,?will likely consider?up to?six?dimensions when defining their prices:?

1. Use case:?Should pricing be different in relation to use cases?including?notifications, marketing, and?/ orc?customer care.?
2. Format: 160?characters in?black and white?versus?rich content?with?images, videos, and more.?In the UK,?the first MNOs?are?looking into this dimension?when determining pricing.?
3. Mobile Originated (MO)?or?Mobile Terminated?(MT): Should prices be different if?the messages begin from the mobile phone or if that’s where they end??This relates to A2P vs P2A and conversational messaging. More on that below.?
4. Message charging or session charging:?Industry players must decide?if or when they would?charge for a session?or per message. Would it be from the?first?or the?second?message??How?would they?define the session??It could be based on?the?number of exchanged messages,?the?duration?of the session, or on?inactivity.?
5. Location:?This depends on?which country the message?is initiated or?terminated. This has been?a big?challenge?for many years?and?adds to the?complexity?of?SMS aggregation.?
6. Service levels:?To what extent do customers want?to pay for the?different?levels of service.?

One example of this is RCS pricing, with the following four main?price models that have been discussed by GSMA, who has a role in standardizing RCS pricing for teleoperators:?

• Per event (which is the same as the SMS model)??
• Session based (time based, rate card, payload or a combination)??
• Access based (Access to base + charge per unique user)?
• Revenue share (this was removed early on)?

With regards to conversational messaging?from point #3 above, before a bank?might?only send one message?to customers and that message had a certain price. Now?with RCS, the bank?can have a conversation?back and forth?with customers?– even having customers reach out to the bank to start the conversation.?The pricing changes with perhaps ten?messages?being exchanged?between the bank and customer. This provides great value for both parties, but what is the bank’s?willingness?to pay??

Willingness to Pay

When it comes to pricing?an existing or new messaging?channel, the key is to understand customers’?willingness to?pay, like the bank.?This?will be influenced by?the following?four factors:?

1. Use Cases?again:?Companies will have different willingness to pay if it is a notification, marketing?or?customer service?use case?
2. Quality,?reputation?and?reach?of the channel:?Facebook Messenger, Viber, WeChat, WhatsApp, and other channels?have varying?success rates. LINK offers the possibility for SMS fallback through our Global?Messaging?platform. Furthermore,?numbers of users?vary?widely.?For example, WhatsApp has 1.5 billion unique active users,?Facebook Messenger has 1.2 billion, WeChat has 1.1 billion, and Viber has one?billion.**?Conversion rates are also impacted by channel and the richness of the content?in the channel.?These conversion rates will play a large part on the pricing of the channels.?Just picture this: with Rich SMS,?well-knitted marketing campaigns?typically?reach mid-single digit?conversion rates,?with the richness of the RCS channel?embedded into Andoid message, conversion?rates?will jump to double digit (as per feedback from?brands on their?first?RCS?retail?campaigns),?so?brands?will?be less sensitive to price?as long as?CPaaS?players?can demonstrate higher?RoI.?
3. System integration and reporting:?This refers to how the integration of the systems and the?quality of information that is provided by the channel itself or the CPaaS?player.??LINK?offers our own?Insight Dashboard?to provide?real-time monitoring of campaign performance and?customer activity.?Advanced CPaaS players offer?unique value-adds?to ensure not only delivery of messages, but also the best possible way of delivering messages. LINK Mobility?provides?SMS fallback,?as well as?intelligent routing of messages through our state-of-the-art?CPaaS platform.?
4. Customer segmentation,?such as demographics or customer value:?Brands?should look to?invest in higher quality channels?for their higher value?“diamond” or “gold”?customer segments. Because of the higher return on investment for these customers,?enterprises have a higher willingness to pay?compared to lower value?“silver” or “bronze”?customers.??

We can look at?Google Verified?to understand pricing going forward.?Google Verified provides?extra value added on top of SMS. With messages that are verified, there is likely also variable pricing as brands are willing to pay for better user experience and more trust and security with the verification from Google.?

Brands must also have trust in the OTT channel owners when it comes to security. Data must be kept safe and brands want to know that?data will not be sold for targeted advertising. Not only do channel owners need to address this, but the entire industry must ensure that brands and end users feel comfortable with how data is handled.?

At?LINK,?we are investing in order to?integrate the many different pricing?options?from?channel?owners and,?above?all,?to simplify pricing for?brands.?Our pricing proposals will?include?omnichannel?possibilities?and?be?focused on brands or use cases.?CPaaS players?will have a growing?role towards their customers as they will?absorb and translate?the diversity?and?the new?complexity?of?the pricing?decisions made by?messaging?channel?owners.?