Revenera today released the Revenera Monetization Monitor 2025 Outlook: Software Monetization Models and Strategies report. This report is part of an annual series that provides product executives at software, intelligent device, and IoT companies with benchmarks about digital business models and trends related to hybrid approaches to monetization and deployment models. 

As software suppliers work to drive profitability, extensive reliance on usage-based pricing is more prevalent than a year ago. Successful initiatives must overcome the biggest barriers to the growth of annual recurring revenue: delayed time to market-for-new features/enhancements and customer acquisition.

“Software suppliers face two megatrends that they can take advantage of to improve their market position. Because Cloud and AI costs are driving up their operating expenses, product teams are considering how to respond to this pressure with pricing and packaging changes. At the same time, insight into real product usage and customer value is more available to suppliers than it has ever been,” said Nicole Segerer, General Manager at Revenera. “There is a significant market opportunity for technology companies that can adapt their offerings to the needs of their customers and grow more quickly than their competition.” 

While subscription models remain top for expected growth, the Revenera Monetization Monitor 2025 Outlook indicates a sharp rise in outcome or value-based models, as well as usage-based approaches. Suppliers who are proactive and able to quickly implement these new models are better able to grow revenues while helping to offset the growing cost of running software in the cloud.

Highlights from the Revenera Monetization Monitor 2025 Outlook: Software Monetization Models and Strategies report include:

• A clear understanding of monetization models is necessary for efficient innovation.
  • The popularity of subscription/term monetization continues. It is the leading monetization model among companies that use one model extensively and is the most widely used model. It is also the model most likely to grow as a percentage of overall software license revenue in the next 12–18 months, followed closely by outcome-based monetization models.
  • Extensive reliance on usage-based pricing (including consumption and metered models) is more prevalent over the past year. The flexibility of pay-per-use may be a method of delivering the flexibility customers want. 
  • Revenue goals are key to monetization and innovation initiatives. Among companies that have changed monetization models, the #1 reason was to “improve revenue margins/company valuation.” Among those who are planning change, the #1 reason is to “better support intelligent device models.”
  • The introduction of new monetization models can be relatively rapid or can necessitate more than a year. While some (18 percent) introduced a new monetization model in less than three months, almost half of respondents (46 percent) reported that it took more than 6 months.
  • Better support of pricing and packaging changes remains the leading reason for changes to monetization strategies. Growing in relative importance over the past year is the need to add/improve automated enforcement.
• Extensive use of SaaS continues, while private cloud deployments see strong growth. 
  • Use of hybrid software deployment models continues. SaaS is still in the lead as the most widely used deployment model, with 86 percent using it at least moderately, up from 80 percent a year ago. 
  • Respondents' use of private cloud is going up significantly. A year ago, 20 percent of respondents reported using private cloud extensively; that number went up to 33 percent today, making private cloud the deployment model being used most extensively. 
  • The staying power of on-premises deployments remains. The number using SaaS extensively (for more than 51 percent of their product lines), 27 percent, only slightly edges out on-premises (25 percent) deployments. 
  • The transition to SaaS will continue. A year ago, 57 percent of respondents indicated that their use of SaaS in the coming 12–18 months would grow; that number goes up to 61 percent this year. More suppliers are transitioning multiple products from on-premises to SaaS; 73 percent report having transitioned multiple products from on-premises to SaaS.
• Product usage data is being used primarily to identify upsell opportunities, identify customer churn/retention risk, and prioritize product roadmap decisions.
  • Delayed time-to-market for new features/enhancements is the biggest barrier to growing annual recurring revenue. Customer acquisition follows close behind as an impediment to growing ARR.
  • Nearly all software companies recognize the importance of collecting product usage data. A mere 2 percent of respondents aren’t collecting data and have no plans to do so. Today 82 percent can gather product usage data either very well or that they have the ability to do some of this.
  • Aligning price and value is an ongoing challenge. Only slightly more than a third (36 percent) indicate that pricing is “totally aligned” with the value delivered to customers.
  • Multiple hurdles for aligning price and value are intensifying. The most pressing is “Lack of insights into user personas and their priorities,” reported by 50 percent. The number of respondents citing “lack of insights to monetize the most valuable features” and “disparate systems make it difficult to achieve single customer view” have also gone up in the past year.
  • Churn risks merit closer attention. The vast majority of respondents monitor churn risk. 97 percent monitor churn risk, but only 21 percent review support tickets to spot churn risk, illustrating an opportunity to improve their processes. 

Methodology

The Revenera Monetization Monitor 2025 Outlook series of reports is based on 418 complete responses to a survey conducted by Revenera from May through July 2024. Job levels of these survey respondents were C-level/executive (23 percent), SVP/VP (17 percent), director (44 percent), manager/team leader (15 percent), and individual contributors/non-manager/consultant (1 percent). This report focuses on Software Monetization Models and Strategies; subsequent reports in this series will address Software Piracy & Compliance and Software Usage Analytics.