Per-user licensing models equal shelfware

A year ago, we declared that dashboards were dead in the world of cloud data. It's now time for shelfware licensing models to go away too.?

Why has the user-based pricing model, which seems so simple, fallen out of favor with customers, vendors, and industry analysts? Could it be greed, group-think, or something else? We interviewed and analyzed hundreds of old and new licensing models at ThoughtSpot, all of which are moving away from it.

Our CRO, Spencer, told me that while he pays his electricity bill per usage, he won't do the same for his Tesla as a per-mile subscription. That question gave me the answer, too.

Although Spencer does not pay per mile, I do for my car. The difference is that he owns his car outright while I am on a lease for three years and 36,000 miles. When leasing/renting anything, it is essential to have a metric to manage the depreciation of the device; otherwise, the amortization will not be equally calculated.

As long as customers own their databases, as SAP and Oracle on-prem did, it would have been easy to sell deterministic and non-elastic licenses. On-prem BI software like Tableau would also fall into this category. In this case, clients were outright purchasing depreciating assets, and they were liable for paying for them regardless of whether they used them. User-based licensing models worked for that.

There has to be an elastic metric in the model where the software is rented, for a cloud-software is an appreciating asset as more features get added. Can the user/seat license be portable and elastic? Yes, but then the credentials, authentication, ownership, privacy, and governance will have to be tied to some other immobile entity. For example, when you are not using your user license, someone else may want to use it, but it should automatically change the new user's ID's permission and scope. Technically doable, but highly confusing and complex.

Since a person isn't pro tem (At least in the non-meta sense), their ID can't be. So user-based are fixed and un-elastic. It was built for the old world of on-prem software.

A leased property should accommodate flexible pricing, and flexible pricing can only be tied to a pro tem metric. That's why companies connect them to time, queries, APIs, and other directly related entities to the value they receive.

To fully deliver the value customers are paying for a cloud software product, we need to eliminate shelfware. Any vendor selling a per-user licensing model for cloud software holds you back and makes you spend way more than the value they deliver to your business.

That is why ThoughtSpot will be launching a completely revamped pricing and packaging model at our user conference next week. We think it will help us go forward in our mission to make the world more fact-driven. I hope you will join us there.