The Price of Success: Martech Pricing Changes Under Consideration
More than ever before, marketing spending is being scrutinized by the c-suite. Now, the pressure to perform is getting passed along to the companies providing those often pricey martech solutions.
A new report from Which-50 suggests that some marketing cloud providers are mulling new pricing strategies in light of the strain some of their customers are feeling.
What shape or direction these changes could take remains to be seen. Marketo CEO Steve Lucas told Which-50 his company sees opportunities to be “economically disruptive.” In response to customer demand, Marketo had begun offering enterprise license agreements. Their traditional pricing model is an annual fee, based on database size.
“A log of customers are asking us for broad-based, all you can eat enterprise license agreements now,” Lucas told them. “That provides, especially for our larger customers, a lot more flexibility as they grow.”
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Oracle Marketing Cloud senior vice president Shashi Seth is another martech titan looking at performance-based pricing models.
“Even our best customers don’t have a way to model when they should keep going and when they should stop,” says Seth. “And most of our clients are leaving too much money on the table because they are too conservative with their spend.”
Marketing technology is a significant budget item for many organizations: According to Gartner, the typical CMO allocates 22 percent of their budget to martech. That has decreased somewhat in recent years, as dollars get shifted to other digital sources in an effort to optimize spending.
“The pricing model needs to change,” said Seth. “And we have already started down this route. We have to move away from traditional B2B models such as seat based, or contact based towards usage based. Our incentive to our customers should be to let them use any of these products any which way they want.”
Read the complete story on Which-50.com.