TABLE OF CONTENTS
You need both engines to make it successfully to SaaS.
There’s a widespread assumption that software companies transitioning their products to software as a service (SaaS) licensing necessarily take a massive revenue hit. We don’t agree. The trip to SaaS can be far less bumpy if you use smart pricing and packaging strategies to smooth the transition for your customers while protecting your existing stream of recurring support and maintenance revenue.
It’s true, of course, that every product you sell via subscription rather than perpetual license means lower upfront revenue. And it takes a while for subscription revenues to surpass what you would have received for perpetual licenses. For this reason, it’s absolutely critical to keep recurring revenues from existing customers going strong.
If you don’t protect this revenue stream, the risk involved in transitioning to SaaS skyrockets:
You could take a big revenue hit from unhappy customers defecting to competitors.
You might have to divert resources from the transition effort to solving the issues of unhappy customers. That will slow your growth rate in booking new SaaS customers.
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