5 steps to software monetization

June 09, 2015


5 steps to software monetization

One of the biggest challenges start-ups face today is finding the best way to monetize their offerings in a secure way. Whether it's an application or...

One of the biggest challenges start-ups face today is finding the best way to monetize their offerings in a secure way. Whether it’s an application or software solution, deciding how to package and price their products can be mind-boggling, and many firms fail to realize how much revenue can be lost when these decisions are based on instincts rather than facts.

How can start-ups address customer demands while keeping their products safe and maximising revenue? Here are five steps that will show a start-up how to use software monetization solutions to track product use at a granular level and adapt its offerings to deliver flexible licensing models that meet changing market demands, while protecting its products from infringement.

Step 1: Track and identify usage
To optimize their products, developers need to understand how customers will use them. Many start-ups deliver their service or product through a cloud-based app and therefore believe that they can easily track customer behaviours. But most companies don’t really have the ability to be granular in their usage tracking and many don’t know what they should be tracking.

Through the in-depth analysis of usage data, software monetization solutions let developers identify patterns in a transparent and automated way. They can easily determine who is using what, when, where, why, and how, as well as what customers’ preferred features are. This will help them better understand the products utilized by certain types of users so they can be tailored to those specific requirements.

Step 2: Segment accordingly
Different users have different needs. Start-ups can determine what these needs are and tailor their offerings by analysing their usage data and identifying patterns. They can then segment, dividing their customer base into smaller groups that share similar characteristics and understand their motivations and behaviours.

They’ll then have the information needed to package and price products according to features, resources, service levels, and use duration. In this way, they can ensure that the right offering is available for every customer segment, while making certain that they’re focused on the products and features that are actually used, instead of wasting resources on capabilities that aren’t needed.

Step 3: Test models
Developers can perform A/B tests to see which product garners the best results. This means giving customers within one segment slightly different software packages to determine which features they prefer. Ultimately, this helps to understand how customers respond to different types of licencing or feature sets, which products bring the highest revenue, and which products, if any, should be eliminated.

Software monetisation code can be embedded within a product’s API, enabling start-ups to easily and effectively adapt their offerings without having to reengineer the code. In other words, if they want to repackage and offer a specific feature set to a new or existing segment, they can do so in a timely and cost-effective manner.

Step 4: Measure results
As the market changes over time, so must a start-up’s products. The key is to do this in a way that doesn’t have a high cost associated with each change. By having a software monetization platform in place, allowing on-the-fly changes, they can continuously track and optimize each product’s performance. In this way, they can extend their products’ life cycle by refining and improving them over time. They’ll also be able to stay ahead of the competition by quickly identifying R&D, business, and engineering needs.

Step 5: Protect your data
Maximising revenues isn’t enough to guarantee business success. Though an increased use of cloud technologies has opened up many doors for start-ups, it has also heightened security risks including tampering, reverse engineering, theft, and licensing infringement.

Developers need to embed code within their software which is device agnostic and helps them prevent unauthorised use and distribution of products and services. However, creating this code can be labour intensive and costly, which is why third-party solutions are becoming popular within the developer community. They’re flexible, keep licenses secure, and ensure that the data is encrypted, protecting source code from theft, manipulation, and tampering. The combination of a secure IP-protection solution with a trusted software-licensing platform provides the best protection against malicious or accidental threats.

By repeating these steps and implementing them as a continuous and circular process, start-ups can provide the value their customers are looking for. Ultimately, by proactively planning and implementing a software monetization strategy that will minimize unforeseeable risks, they can optimise their business practices, ensuring substantial business growth.

Decisions around product packaging, roadmap investment, sales, and marketing strategies affect each other and should be approached comprehensively. When software monetization strategies are implemented successfully, products are protected against possible threats and are packaged in a way that lets customers license them in the way that they need. Start-ups can then stop worrying about securing their offerings and start focusing their R&D efforts on the right elements, seeking greater market share while reducing operating costs.

Jamie Longmuir is the Regional Director for Software Monetization at Gemalto, where he oversees the technical specialists and sales teams, implementing new licensing models, IP protection, and entitlement management strategies.

Jamie Longmuir, Gemalto
Software & OS