September 19, 2012 | Authored by: Vindicia Team Blogs
Optimize Pricing and Maximize Revenue for your Digital Business in 5 Steps
Running a business in the Cloud has changed the way end-users consume products.
Fading away are the days of visits to brick-and-mortar stores to buy software packaged in a box, music burned onto a CD and literature printed on paper. We now live in the age of the digital economy, where we buy subscriptions, allowing us to download software, music, books and more from anyplace in the world where we have access to the Internet, and consume those digital goods whenever we want.
The Cloud also has direct impact on the revenue stream of digital businesses. Monetization comes in the form of recurring revenue models. One of the best ways to optimize profitability is to focus on customer usage. Customer patterns are different and vary over time, so understanding the core unit of measure, or set of measures, that creates value for the customer is critical.
Yield Management is the process of understanding and designing usage rate plans in order to maximize revenue or profits from a customer behavior. As explained during the webinar, Pricing Innovation for the Digital Economy: Yield Management and Targeted Pricing Plans, follow this five-step process to help optimize yield.
- Define Usage Units of Measure: Track and understand the measures for usage that create value.
- Define Usage Unit Price Curves: Create yield curves that show where payments should come from and how different contracts are performing.
- Identify Pricing Issues: Determine which rate plans are not yielding enough revenue.
- Define License Structure to Match Customer Behavior: Optimize yield based on behaviors, like spikes in usage.
- Monitor Over Time: Figure out if the changes made to rate plans yield the results you were looking for, and determine any other impacts those changes made to customer usage.
For more details about how to optimize pricing and maximize revenue for your digital business, watch the webinar, Pricing Innovation for the Digital Economy: Yield Management and Targeted Pricing Plans.
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