Clear pricing. Fast deals.
Big wins for Nearmap.
Nearmap replaced data consumption pricing with an area-based model its customers could understand and predict.
Nearmap built its licensing model in Australia, where data costs were low and competition was thin, and customers paid for the data they consumed. Imported into the U.S., that model stalled. Buyers could not predict what a month would cost, the enterprise customers who did sign signed at significantly discounted fees, and smaller firms kept Nearmap for their largest projects only.
SPP rebuilt the licensing strategy around a metric that works globally and is easy to explain, vetted the alternatives with customers before launch, and carved the historical data archive out as its own paid capability. Close rates moved to near 50% within the first month of rollout and have held steady since. Small and mid-size deals now close in days.
since rollout.
after rollout.
around the globe.
In Australia, low data costs and limited competition made consumption pricing work. In the U.S. the same model met ready alternatives and buyers who could not forecast what a session, or a month, would cost them. Deals slowed, discounts deepened, and usage stayed shallow.
The metric was the problem.
The model Nearmap
imported to the U.S.
In its home country of Australia, Nearmap developed a licensing model that charged customers for the amount of data they consumed using the product.
Initially, this made sense because the more granular a customer wanted to view a specific location, the higher the data costs Nearmap would incur to provide it. With low data costs and limited competition in Australia, the company’s powerful product enjoyed success. Nearmap imported that model to the U.S. market and quickly encountered difficulty closing sales. They struggled to penetrate small- and mid-sized customers, like real-estate developers and roofing or solar contractors and government contracts, and the enterprise customers they signed were at significantly discounted fees. They traced much of the problem to the data-usage pricing model, which made it difficult for customers to predict their costs when using Nearmap’s solution. And in the U.S., unlike Australia, competitive options were readily available.
Nearmap engaged Software Pricing Partners (SPP) to devise a new licensing strategy that would help the company penetrate governmental and enterprise accounts, open small- and mid-sized company market segments, and scale the use of its solution within its customer base.
“With new pricing that we implemented, we’re closing small to mid-size deals in days, and our enterprise pricing sales cycles have gotten smaller as well.”
What was breaking
under consumption pricing.
Tasked with helping Nearmap improve its market penetration and long-term scalability, Software Pricing Partners identified several key challenges that needed to be overcome:
Costs customers
could not predict
The unpredictability of the data consumption pricing. Customers use the Nearmap solution in vastly different and inconsistent ways, making it difficult to predict the amount of data they consume in a given session or time period. This frustrated customers, who were vulnerable to surprisingly high bills at the end of the month, and slowed the decision-making process for potential customers.
Shallow deployment
in the base
Shallow deployment within the company’s customer base, particularly small- and mid-sized companies. Despite its product superiority, many customers were choosing to use the software for only a small portion of their business needs, because of the cost uncertainty of using it more consistently. Instead, they relied on other options (i.e., Google Earth) for some of their information needs, reserving Nearmap for only their largest and most critical projects.
High U.S.
bandwidth costs
The relatively high cost of bandwidth in the U.S. exacerbated the challenge posed by Nearmap’s existing pricing model.
Internal doubt about
a new model
Nearmap leadership was initially cynical of their ability to establish an alternative to its data consumption pricing model that would be both fair to its customers and enable it to maximize revenue.
Licensing, redesigned
around the customer.
To properly revamp the licensing of the Nearmap solution, Software Pricing Partners dug deeply into the company’s technology and target customer segments:
Understanding the customer
SPP conducted a comprehensive review of how customers within each targeted segment used and derived value from the solution, including detailed interviews and observations, and a thorough study of product usage data.
Understanding the solution
By immersing ourselves with company engineering and development teams into all aspects of the product’s construction, we were able to identify if and how the product could support potential licensing alternatives.
Defining new licensing options
We designed, scored and ranked the impact of multiple licensing alternatives, then vetted them with customers to ensure they were understandable and would remove obstacles for buying the product.
What the new licensing
model delivered.
Successfully established and implemented pricing for multiple countries around the globe.
Software Pricing Partners’ engagement with Nearmap delivered significant and positive results, including:
Close rates
near 50%
Within the first month of rollout, closing rates skyrocketed to near 50%, and have held steady ever since.
Historical archive
carved out
SPP recommended carving out a previously embedded historical data archive, a valuable feature which allowed developers and government agencies to see precise changes to the view over time, and charging additional fees for this access.
Enterprise depth
and profitability
Nearmap has secured more enterprise customers and significantly increased their average profitability.
New mid-market penetration
The company has greatly increased its penetration into small- and mid- market accounts, an entirely new market with strong growth potential.
Faster deals,
shorter cycles
Deal velocity has increased, with shorter sales cycles for both enterprise and small-to-mid sized deals.
In December 2022, Nearmap was acquired by Thoma Bravo for AUD $1.055 billion (approximately US$706 million). The licensing and pricing architecture built during the engagement remained in operation through the transaction and the diligence that preceded it.
“Salespeople all adopted the new pricing model…sales cycles have gotten shorter, the win rate is approaching 50%, and we continue to build more and more deals into the pipeline.”
Nearmap on meeting their pricing goals.
Nearmap on the goals the engagement set out to meet, and what changed once the new licensing model reached the field.
Other architectures
that survived.
Nearmap is one of several architectures that stayed in operation through a sale process. If you are evaluating a software company’s pricing ahead of a transaction, this is how SPP works with PE firms and operating partners.
BambooHR
ARR grew 750% in three years and approached $250M, with the enterprise segment opened on the same pricing architecture.
OSIsoft
Acquired by AVEVA (Schneider Electric) for $5B. Pricing architecture survived PE-level diligence five years post-engagement.
BDNA
20% exit premium attributed to the pricing architecture. Two years post-engagement, Flexera acquired BDNA at a measurable revenue lift that went straight to enterprise value.
Looking for profitable growth?
If buyers cannot forecast what your product will cost them next month, if enterprise deals only close at a discount, or if a model built for one market is stalling in the next, the same architecture work applies. Bring your version of the problem.