I recently started at Knack and have been speaking to a number of our most innovative, fast growing customers. It’s been an eye opening journey and while a number of reasons often get cited regarding why Knack was chosen over legacy tools like Microsoft Access, Excel, Spreadsheets, paper forms, or other No Code solutions, the customer friendly and flexible pricing model is almost always mentioned.
There are a few core reasons (or perhaps resolutions) organizations would be wise to consider as they evaluate the pricing models for their No Code platforms (and really any other SaaS tools) going into 2023.
- Reduce SaaS sprawl and lower cost per app
- Meter pricing with a data utility model that maps cost to value
- Improve cost predictability to accelerate (not stifle) innovative problem solving.
Let’s take a look at the first resolution going into 2023. Looking ahead as we enter a period of more economic uncertainty is that you need to ensure investments in new (or existing) SaaS tools offer a great price to value. SaaS sprawl has been a concern as the average number of tools used inside an organization has grown dramatically over that past 10 years. With tech stack budgets tightening, going into 2023, CFOS and organizations are looking to reduce SaaS spending to eliminate the most repetitive and underutilized tools.
According to ITProToday, “More than eight in 10 (82%) teams reported they are facing higher expectations, and 44% of respondents said they are actively auditing their business’s current processes to figure out where to save time and money.” No Code platforms like Knack are typically the last type of tool to get cut, simply because the ROI and price to value are so high. It’s a swiss army knife and since you aren’t charged by the user, the value can start to grow exponentially as you add users and new applications to solve more data, workflow, and automation challenges and lower your cost per app.
Cost–Effective Solution to Reduce SaaS Sprawl and Increase ROI
The pricing model in Knack platform is designed to offer your teams the ability to start small and grow into new apps and use cases over time rather than procuring a new point solution for every new challenge that comes up. This phenomenon is called the long tail of apps. Most organizations spend the majority of their budget on mission critical transactional systems like ERP. However, purchasing a new SaaS tool for the 100s of use cases at the “long tail” is getting far more scrutiny these days. In fact, the best practices to reducing SaaS sprawl is often to eliminate underused or redundant apps and duplicative licenses. When you invest in a tool that where the marginal cost of solving the next point solution challenge is incredibly low, that’s when an organization becomes efficient with their technology and SaaS spend. And according to a 2022 State of Business Technology Report from Systematic and Workato, 57% of IT teams are under pressure to reduce SaaS spend right now. One way to do this is to consolidate on a platform that can grow with you as new point challenges arise rather than procuring, deploying, and forcing a team to learn and adopt a new tool every month. When you entire organization has access to a platform that puts the power of problem solving in their hands, each app that is built results in a lower cost per app and a greater overall ROI (and significantly less SaaS sprawl)
Invest in Tools with Utility Pricing Model for Accurate Cost Forecasting
But there is more to it than simply getting the lowest cost solution for a particular departmental challenge. The issue runs much deeper. Organizations also want to be able to accurately predict and forecast operational costs for the upcoming fiscal year. So the second New Years resolution to consider is to ensure you are investing in tools that offer a utility pricing model with the ability to start slow and grow purely based on the value to the organization. For many tools that anchor on user based pricing, both in the No Code application development market and beyond, the reality is that you are likely overpaying for users that don’t get value from the system. Part of the reason is that it takes time for users to fully adopt solutions and ramp on the platform. Another piece is that many of your users never even log into the system, or they have cyclical challenges to solve at the end of the quarter or end of year and that is the only time they ever log in. Paying for these users, even at a discounted rate for infrequent usage is a drain on your spend since it doesn’t map well to the value provided. Utility models that meter on data on the other hand scale with the value received since the amount of data is a much better proxy to value than users or even apps.
A common use case that exemplifies this paradigm in building customer portals. These solutions offer self serve transparency in the areas of order management, supply chain workflows, contract updates, or even non profit member databases where you can communicate directly with your end users. These users can even update their own information, or view new data submissions and edits they have made to their own profile online. These solutions offer tremendous value by keeping a constant real time communications stream running with your customers or partners and eliminating the need for them to connect with you directly via chat, email, or phone call. It’s a win for customers and the organization, the customer experience and can often lead to lower costs of customer support via the self service approach.
It’s clear this customer portal use case offers value, but it breaks down completely when you meter your pricing on users or even limited-users. Those models break down because the cost incurred grows every time you need to add new users to the platform. Typical workarounds are often to publish a static web page online that needs to be updated by the organization, rather than end users updating their profiles themselves via a self service portal. Pricing models that simplify the user model and meter on the amount of data used (records and storage) offer far greater price to value for by delivering members or customers greater visibility and engagement with your organization based on the amount of data they consume. This way organizations are charged more based on the amount of data viewed/consumed which maps to the real value of the solution. It doesn’t charge based on end users who don’t need access or need it on a very infrequent basis like quarterly reporting only a few days a year.
Ensure Predictable Costs and Enable Innovation
The last resolution to consider in 2023 is more nuanced, but still extremely important. If your pricing model doesn’t offer a simple way to forecast and predict future costs over the course of growth, your team’s innovation and problem solving will suffer. Why is this? Many organizations using no or low code platforms start with solving a point solution, but then look to expand into related use cases. An example might be tracking order management, then adding inventory, and then connecting to the finance department for cost data, or even customer success to integrate customer ticketing information. Anytime these solutions grow and expose data across more departments, the workflows become more valuable and more aha moments for team members are exposed. Perhaps you can understand how an increase in customer tickets is affecting their use of your products. This type of information can be very powerful for building cross departmental or cross organization workflows. The issue is that department heads, app builders, or even Professional Services organizations who are building these solutions become more reticent to unleash and empower innovation because the cost of adding users for each use case is cost prohibitive, unpredictable, and hasn’t been budgeted for in the annual plan.
Extending the application to potentially hundreds of new users is often untenable. That is why pricing models from vendors like QuickBase, Capsio, Kintone and others that don’t offer unlimited users, apps, and reports tend to stifle high velocity problem solving especially in these high volume or user use cases. Some examples include integrating across to other departments and systems, extending back office data out to field workers, or connecting financial or HR information more broadly with business operations to get a better snapshot of the health of the business.
The new year is upon us and many organizations will be trimming their SaaS footprint. Focus on the tools that offer the greatest price to value, those that are extensible to additional and broader use cases, and those that offer a predictable, utility based pricing model that scales with your data and value.