Economic uncertainty and budget tightening are accelerating the shift from business software to consumer pricing. Consumer pricing is based on how much software customers use the product, rather than based on annual or multi-year regular subscriptions. This kind of reason$Snowflake (SNOW.US)$The promoted model is being adopted by more and more software manufacturers, including$C3.ai (AI.US)$和$Autodesk (ADSK.US)$。

Analysts have traditionally seen consumer pricing as a burden on service providers, arguing that customers can cut back faster when times are tough. But in the current market slowdown, Snowflake Inc, which is dominated by consumer pricing, said the company continues to attract new customers to use its data storage and analytics products, who want to buy only what they need when money is tight. Instead of being locked in a big contract.

by contrast,$Salesforce (CRM.US)$和$ServiceNow (NOW.US)$And other backbone companies that adopt the subscription model have slowed down in acquiring new business.

The slowing sales cycle has prompted C3.ai, an enterprise software provider, to shift all its new business to consumer pricing. C3.ai said that because the initial purchase cost is lower and requires less administrative approval, it is much easier to register new customers. "in a recession, you need to talk about a few cents instead of millions. "

Tom Siebel, founder of C3.ai, says the pricing shift will flatten revenue in the short term before accelerating growth.

Last month, Mike Cikos, an analyst at Needham, said that changing the way commercial software companies sell their products is a challenge, while C3.ai shares "are likely to remain uncertain until we can see each other's successful transition. "

According to a report by venture capital firm OpenView Partners in 2021$Amazon (AMZN.US)$、$Microsoft (MSFT.US)$和$Alphabet-A (GOOGL.US)$Cloud computing providers have long charged customers based on server space usage, but this pricing model has been extended to a wider range of software services.

According to a survey conducted by the company, more than half of the software companies said they expected to adopt consumer pricing by 2023. Other well-known examples include customer communications providers$Twilio (TWLO.US)$And OpenAI's image generator Dall-E.

Software stocks have been hit hard this year as traders bet on an increasingly aggressive Fed rate hike. ETF, the iShares extension, is down 38% this year. For a long time, high-growth companies have faced the problem of lack of profitability, but this year has become a fatal weakness for software companies like Snowflake Inc. A basket of lossmaking technology companies compiled by Goldman Sachs Group fell 59 per cent. In this economic context, it is not surprising that these companies are willing to try new pricing strategies to maintain growth.

Not every company's executives change their models. Atlassian Corp. Co-CEO Mike Cannon-Brookes says the pricing model doesn't make much sense for collaborative applications, especially if it doesn't consume specific resources such as server space. Cannon-Brookes says customers expect a simple per-user subscription to workplace tools, which are part of a typical working day such as Atlassian's Trello. "I don't think I need to get rid of it. "

Consumer pricing is less effective when rising costs, also known as the "taximeter effect", prevent users from using the service, according to OpenView. They mentioned Hired.com, Adecco Group AG's recruitment platform. On this platform, recruiters post less recruitment information when pricing per person. According to OpenView researchers, consumers may also be hampered by high-cost variability and prefer a simpler buying experience.

Snowflake Inc's bill sometimes surprises customers. Many social media posts share stories about the company's high fees or tips for reducing costs. Earlier this year, Snowflake Inc executives said that improving the product would reduce customer fees.

Usage-based pricing is less common in applications than infrastructure, but that may be changing. Autodesk, known for its architectural and manufacturing design processes, launched an one-day "Flex" license last year. Under this plan, AutoCAD, one of its flagship apps, costs $21 a day to use, compared with a standard monthly fee of $235. According to CEO Andrew Anagnost, about 40 per cent of users of the flexible pricing model are new users.

Anagnost said. "this is a powerful tool for small businesses that can't fully subscribe to everything we do," I think in the end, most people will have some kind of spending plan. "

Today, Snowflake Inc looks like a senior pay-per-use company. Chris Degnan, the company's chief revenue officer, said, "if the software-as-a-service company does not complete this transformation, it will fail. "