LogicNow has announced the launch of a new pricing strategy for its MAX Backup disaster recovery solution, through which partners will have the option of paying per device protected instead of by the amount of data protected, which has been the norm in the industry.
LogicNow has had a tumultuous last couple of years, which saw its old parent company, GFI Software, spin off its security business unit (which became ThreatTrack) followed by the decision to split the remaining business, with GFI MAX, GFI’s SaaS-based business unit, becoming LogicNow.
“We decided to split the on-prem and SaaS units into separate entities because they had very different business models,” said Alistair Forbes, LogicNow’s GM. “The on-prem business had a traditional support and maintenance model, while our part was all SaaS, where we do all the infrastructure, and had a monthly revenue model. The support requirements were very different, to the point where the synergies from being part of a larger organization were outweighed by the difference between the two parts.”
LogicNow’s decision to offer a departure from the traditional way of selling disaster recovery was also determined by a belief that a change better suited many MSPs’ business model, and creates more stability that will work in the best interest of both MSPs and their customers. Forbes said many customers prefer the certainty that comes with a fixed charge, compared to more fluctuating prices. He also said that MSPs struggle with the existing model with larger customers, where today’s increase in data volumes leads to unhappy customers.
“The traditional pricing scheme based on storage volumes, which matches costs to revenues they generate works well for customers with modest requirements,” he said. “What we found, however, is that for our MSP customers looking to service larger clients, the traditional pricing was less economical. Their concern was the cost of scaling. If they pass the cost on to the customer, the customer is unhappy. If they don’t, then their margins are eroded. This way, they won’t be squeezed for margin as they go for larger customers.”
The fixed pricing should make it easier for MSPs to sell their service to customers, Forbes said.
“It will be easier to sell as a solution because it supports the service provider proposition that they offer a complete end-to-end solution, with all costs included, and gets away from the ‘cost plus’ type of mechanism,” he said. “This fits the whole Disaster-Recovery-as-a-Service model better, because it fits how they go to market with their offers.”
Forbes indicated that the fixed pricing includes everything that is part of the LogicNow solution.
“It’s not just software, but also the back end storage and all the additional capabilities,” he said.
Forbes also noted that while MSPs who have larger customers will likely welcome the new fixed charge option, smaller MSPs may think that the existing models will work better for them.
“That’s why we are offering a choice of the two models,” he said.
Forbes said that he thinks that the better fit with the business model will take the disaster recovery market towards the fixed price model.
“I believe we will see more of the market moving to this,” he said. “There is also a message here around flexibility, to give more choices around that. The key for service providers is to be able to tailor their offerings to a customer situation.”
