Tackle's king of engineering Stefan Theard shines a light on how contracts with consumption pricing work through the AWS Marketplace and shows you how it can help get your software into the hands of more businesses, and gives you flexible options to serve their consumption-based needs.
The majority of people see “metering” and immediately recoil at the idea of adding it to an existing product or taking advantage of it externally. Metering generally means technical integration, engineering work, and maintenance; three concepts that for most are paired with hassle, time and energy –all things in short supply. But imagine delegating all of that work to someone else and only needing to care when your user takes an action in your software. Today, I am writing to bear the good news that there is no need to keep this thought in your imagination; Tackle is here to help.
On the AWS Marketplace, AWS provides access to a type of listing called Contracts with Consumption Pricing (CCP) which is essentially a subscription model with the ability to track and charge for overages. The concern software vendors most often raise when offered this type of listing is “where are we going to find engineers to build the metering integration and maintain the model?” This is especially understandable when AWS requires metering records to be sent every hour for every user and for every dimension of a product whether a user takes an action that requires metering or not.
To provide an example: Let’s say you have a software product that allows users to consume up to 10 gigabytes of network traffic per month. If they exceed 10 gigabytes of network traffic you don’t want to lock them out of your product and say “well that’s enough of using our software!” Vendors in this situation instead prefer to charge a flat rate for the additional usage during that month without disrupting their service in any way, but this comes at the cost of operational efficiency both for the vendor and the consumer.
In addition, in order to list any product on the marketplace, a base level of integration appears to be required. Vendors then have questions such as: How do we know a new order came through marketplace? How would we know if a user modifies their order through the marketplace portal? How do we know if a user cancels their order through the marketplace portal? The unknown creates stress that then has vendors questioning whether or not marketplace is the best option, not knowing just how much potential is squandered through the deterrence.
If this alone isn’t enough, an additional layer of technical integration for notifying the AWS marketplace of overages is required of all vendors using CCP. This includes a long running process that meters all users for all possible overage types every hour with empty records and then interleaves real metering records when a user takes an action that requires metering. All to say, the setup, the process, and the monitoring seem more than intimidating to the majority of companies. When the psychological and effort barriers of entry are tackled, however, the benefits of using the CCP option are boundless.
So then why use CCP? The main benefit of using CCP is keeping a pathway open between the vendor and the customer that allows the customer to continue using the vendors software and for the vendor to continue being paid fairly for that usage. Using alternative listing types lock both the vendor and the customer in to a more restrictive workflow wherein only a static contract price is paid over time. CCP is dynamic and can change month to month based on how much the customer uses the software. CCP is an operational software saver.
The benefits of CCP are clear, but the integration to reap the benefits can be resource and time intensive. Instead of doing all of that technical integration which requires a lot of engineering man hours to build and maintain, Tackle can take care of all the marketplace interactions. We can communicate with AWS marketplace and you communicate with us. The difference is that instead of a constant hourly process that you need to maintain you can instead communicate with Tackle if and only if a user takes an action that requires charging an overage.
As far as communicating with Tackle goes we have simplified that to a single, very simple API call or interaction with our Simple Metering page in Downstream that allows our vendors to send metering records by simply clicking a button. Pretty cool, right? Let’s get the conversation started!
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