The new licensing option is based on the previous year’s usage, plus a negotiated consumption increase goal for the next three years, with the MSP getting everything above that goal at no cost.
Data protection provider Asigra has introduced a first in the data protection industry, an Unlimited Use Subscription License that becomes a new option for Asigra MSPs. Asigra expects many will opt to replace the pay-as-you-go model. It will give their MSPs cost certainty, at what Asigra thinks MSPs will find to be a very reasonable cost that will increase their profitability.
“It aims to do two things for partners,” said Eran Farujan, Executive Vice President at Asigra. “First, it will goose their margin. Second, it will provide simplicity, consistency and cost certainty. The first one seems to be the more important to them.”
Here’s how it works. The service provider will negotiate a three-year price with Asigra, based on that MSP’s usage from the previous year, plus a jointly agreed upon growth commitment. The costs associated with the license amount will not increase regardless of how much the service provider’s usage goes up during the three-year term. This both gives the MSP increased potential for greater profits, while also reducing the potential for license over-subscription.
“It’s a commitment over a three-year period, which is typical for the industry,” Farujan said. “There’s a modest commitment to growth, such as 10, 15 or 20 per cent, which is built in on top of the previous year’s usage. Anything above that negotiated rate would all be pure margin for the partner.”
From Asigra’s perspective, while a modest increase in growth over the negotiated rate is an accepted cost of doing business to get a happier partner with higher margin, the idea isn’t to have a huge disparity between that rate and the partner’s increase in business.
“There is certainly a risk to us,” Farujan said. “There is the chance that we sign a deal with a partner based on the expectation of say, 10 per cent growth, and then they grow at 200 per cent. They make a lot of money, and we get hosed. We then have to wait until that three-year deal expires to catch up.”
The partner also benefits because any increase in costs that would naturally come if they see an increase in consumption is borne by Asigra.
“We do see some revenue certainty though from this model,” Farujan said. “We know what our revenue will be from that partner for three years. In addition, we are also offering this to new partners, and we think it will be a helpful recruiting tool. If they get past that growth rate, it’s all profit for them, and that’s an incentive to do business with us.”
This pricing model hasn’t been offered in the data protection space, Farujan said, and while it might be used in some other industries, they aren’t aware of it. He said that the idea came from brainstorming, not a decision to adopt a model they saw working somewhere else.
Farujan said that while it’s certainly popular that if the new mode turns out to be popular for MSPs and profitable for Asigra, competitors could copy it and remove any differentiation they enjoy. He doesn’t think it’s a model every company could adopt, however.
“It comes down to what negotiated growth rates companies are prepared to take as a minimum, and who their investors are,” he said. “If others do copy it, that would be flattery, but not every company has the same financial structure as us. They may have debt, and may not be able to give up the extra revenue. We are privately held and have been in business since 1986. We can afford to have a longer-term outlook.”