Selecting the right low code/no code pricing model is essential for enterprises to realize the many cost savings benefits these popular citizen-led development platforms offer to enterprises. Read on to learn about the various factors to consider to make the best choice for your organization.
The case for no code/low code
The last few years have been rough for most enterprises, to put it mildly. The COVID-19 pandemic disrupted supply chains and forced many businesses to close their doors. The subsequent war in Ukraine and its ramifications, such as energy crises, supply chain disruptions, etc., left many business leaders struggling to make difficult decisions and pushed enterprises to quickly adapt to new ways of working.
With market uncertainty and macroeconomic impacts looming, enterprises are seeking innovative, cost-effective tech solutions to adapt to changing demands. Low code/no code platforms aim to bridge this gap of unrelenting business needs and the restricted bandwidth of IT teams through the rise of the citizen developer.
Plethora of low code pricing models – boon or bane?
The increasing popularity of low code/no code platforms can be partially attributed to the diverse pricing options that cater to various customer needs. The extensive options offer customers greater flexibility to select the most suitable pricing to meet their requirements, enabling them to leverage low code/no code platforms and remain within budget constraints.
While offering a wide range of choices provides flexibility to procurement teams, it also can make it confusing and difficult to choose the option that works best in each context. Let’s simplify the different scenarios.
How to choose the right low code pricing model for your organization
First, pricing options can be divided into these two categories:
Perpetual licensing – Customers pay a one-time fee to use an application indefinitely.
Subscription-based licensing – Customers pay a per user/application fee. This pay-as-you-go model has gained greater acceptance among enterprises, with over 80% of clients preferring it
Now, let’s compare the two most frequently used subscription-based licensing models below:
- Application-based pricing, as the name suggests, is based on how many end applications the enterprise builds using the low code/no code platform. Typically, platform providers offer either per-application-based pricing or a bundled price for a predefined number of applications. Bundled plans are billed for the entire contracted bundle regardless of the actual number of applications the client deploys. For example, if a client opts for a 100-application bundle, the provider will charge for the entire bundle whether the client deploys one application or 99 applications.
When does application-based pricing make sense? Application-based pricing models usually are starting points for organizations to explore low code/no code platforms. It allows them to dabble with the trend without breaking the bank because it is easier to control the number of applications. For example, an organization might use application-based pricing when replacing an HR Management System with a group of three applications (for core HR, learning and development, and payroll) built on low code/no code platforms
- User-based pricing is more focused on how frequently the application is used versus the number of applications built. Platform providers usually classify users into the following two categories:
- Internal users – Individuals within the organization who use the platform to access or build and deploy applications. Usually, platform providers provide a lower band on minimum commitment for the number of internal users (For example, enterprises can’t contract for five internal users)
- External users – These are named individuals or entities outside of the organization who interact with the applications developed using the low code platform
When does user-based pricing make sense? More mature enterprises that have had successful proof of concepts and are looking to scale this organizational capability will probably find user-based pricing more convenient. At this point, their objective typically will be to democratize low-code capabilities across the organization rather than to target specific use cases.
Keeping the number of internal and external users of low-code applications as one of the primary metrics for measuring success makes sense in scale-up mode. This model also allows enterprises to pay for actual usage rather than committing to a bundle of applications they may not deploy to production
Choose a pricing model that works for your organization
Low code/no code platforms are the superheroes that enterprises need in the current uncertain and rapidly changing business environment. However, to achieve the elusive return on investment (ROI) that all enterprises look for, selecting the correct platform from the plethora of available offerings is equally essential to choosing the right pricing model.
Selecting an appropriate pricing model hinges on multiple factors, including an organization’s goals, development level, and intended use cases. Failing to properly align these requirements to the available models and pricing options can lead to either overpaying (by double or triple) for the requirement or result in dissatisfaction due to feature or usage restrictions at the chosen price point.
If your organization needs help in determining the right low code pricing model and the market price benchmarks for your low code/no code platform, email [email protected] or contact [email protected] or [email protected].
Watch the Software and Cloud Pricing and Contract Negotiations: Keep Spend in Check webinar to hear Everest Group’s software pricing experts discuss recent pricing trends, key tactics enterprises use to keep their software spend in check, and the outlook for software and cloud pricing in 2023.