Last week there was a discussion on the blogosphere about SaaS pricing. Phil Wainewright and Vinnie Mirchandani both had a go at it, as well as many others. I read a lot but initially didn't have a lot to say. But this weekend the subject kept coming into my head and I finally decided that I ought to go ahead and get this down. When I first read the posts on SaaS pricing my initial reaction was that many writers were not understanding the nature of the 'Mashups' that are starting to take place in Software as a Service. For example, when a business wiki service like CustomerVision is mashed up (meaning integrated with) with a CRM system like NetSuite the result is not everyone in the company having both a CustomerVision license and a CRM license. To the contrary, sales and support could have CRM and Wiki licenses, but engineering and operations and finance could simply have the Wiki license. They would still be able to use the business Wiki to collaborate and communicate but why would they need to see the customer record in CRM? Then another point kept bugging me as well. I talk to a lot of software prospects who want to buy industry specific software. There are tons of these applications on the market. From mortgage banking to bicycle stores to steel slitting, there are hundreds of application packages to help manage a specific business model. And we are not talking, in the case of the mortgage banker, just an application to screen applicants and generate documents; but rather, all of that plus accounting, payroll, etc.. Industry specific software like this is the antithesis of the SaaS mashup. They are polar opposites in that the SaaS mashup enables a key application, like NetSuite, to add functionality and users with an integration to a third party application that NetSuite will never code itself. Two broadly conceived and executed applications integrated. On the other hand, the specialty, industry specific application package was designed from the ground up to be the total package for a narrow range of functionality. The interesting thing is when you look at the business models of the companies that bring products like this to the market. The narrowly focused company that puts out the all in one application for a specific industry model must compete with 5 other companies for a very thin slice of the economy. Version 1.0 never really makes it to Version 2.0. It gets stuck in the land of unchanging revenue. In other words they hit a will quickly and that's the end. Product often gets sold to another company that harvests whatever revenue they have from annual maintenance. The other company produces a broad market application which enables it to first of all have partners and products for integration; but also enables it to continue to grow and add customers through version 11, 15 whatever. SaaS pricing is an a la carte offering. You can buy just what you need and where and when you need it. It will get you to the same level of functionality that the industry specific software does, but you will also see continued enhancement and innovation as the product(s) continue to grow in the marketplace. | 
