A Leading Software Solutions Company
The pricing changes suggested by Rubicon are projected to result in the capture of more than $90 million in additional margin
A leading global software solutions company engaged Rubicon to help them optimize pricing and licensing requirements in the Education vertical market for a specific suite of applications. The engagement was an opportunity for the company to respond to changes in the market—in particular, new buying methods—and leverage new licensing vehicles to proliferate usage of its solutions.
About the client
A major software company whose technologies are considered industry standards, the client’s products are frequently used in several high-profile industries. With solutions that broadly impact content in a variety of media, the client company has changed the way people use ideas and information.
The challenge
To sell more product to a wider audience at greater profit, the company wanted to better understand customer perceptions of its site licensing program and what it would take to gain greater adoption among general users. The company was interested in understanding the various options for its site licensing and whether it would complement or replace the company’s current term, contractual, and concurrent licensing vehicles.
Beyond pricing demand, the program structure was also important to consider, because licensing options are a critical part of the company’s go to market strategy in the Education market. Understanding the many nuances of this key vertical market was also important as the engagement would have a far-reaching impact on the client’s business for years to come.
Rubicon designed the engagement around a set of in-depth, qualitative research interviews with internal experts and key customers. The primary research added to initial work done by the company. The engagement required Rubicon to reach across multiple business units and obtain input that would validate specific usages, demands and price sensitivities.
The work
With recommendations from other internal clients and six years of experience working with the firm’s Education business, Rubicon was the obvious choice for this engagement.
Rubicon set up internal audits and produced a situation analysis which helped define the requirements for the in-depth research work.
The audits consisted of interviews of five internal stakeholders and six individuals in global sales. The documentation gleaned from the interviews provided a research baseline and allowed Rubicon to set specific client expectations. This produced broad internal client buy-in regarding the overall engagement and the recommendations. Questions centered on market requirements, expectations and strategy, margin and revenue expectations, competitive and peer-vendor programs, and gap identification. Regional sales input provided detail on specific geographic concerns and issues, channel requirements, perspectives on price sensitivities and the competitive outlook.
Early findings were provided to the client, keeping them informed throughout the research process. The project data was analyzed and formal recommendations presented with the involvement of the extended team.
The findings and synthesis provided detailed information regarding customer demand, licensing vehicle requirements and recommended price points.
Keys to success
Success required political acumen and tenacity within an organization marked by a high rate of adaptation.
Detailed qualitative, bias-free interviews were a prerequisite to accurate, inclusive research.
Rubicon constructed a pricing overview based on the current situation. The proprietary Rubicon murderboarding™ methodology was used to review multiple possibilities and construct a summary that included an integrated, single solution that included the potential for a 40% price uplift.
Rubicon recognized early in the engagement that concurrency presented a large opportunity and recommended that the client increase the premium to 1.75X.
The results
Rubicon’s recommendations covered four areas: segmentation, vehicles, pricing and execution.
Segmentation that helps users self-select products and licensing vehicles in alignment with the company’s strategic goals was a key decision criteria. Vehicles included a term and perpetual site licensing, contractual and term licensing, and an expanded role for concurrent licensing.
The pricing changes suggested by Rubicon are projected to result in the capture of more than $90 million in additional margin.
The client company is now involved in marketing concurrency to an important user group, shifting the focus of term site licensing from core users to expanding the user base, pursuing opportunistic student licensing and restating the value proposition for active users. The licensing mix has changed substantially and the client is working on a plan for a global marketing plan.
Rollout continues and there are additional elements the company plans to implement in the FY2009 timeframe.
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