Jack MandardThere are currently 3 main revenue models for software distribution (with of course many variations of them).

The first is the historical model whereby a user buys a product, or rather the right to use a product, and then regularly pays for updates. In this case, the service aspect is mainly related to software integration and initial interfacing, followed later by successive upgrades.

The second model is an economic approach to the software concept, made possible by the development of technical platforms where the software is no longer installed on the client machine but used as a shared resource and “rented” to the client, allowing invoicing per usage and eliminating initial purchase costs. This model makes little change to the costs over time, but allows improved adaptation of resources to meet real needs. This is the traditional SaaS model.

The third model is really different because it reduces the value of software part of the offering, but aims to have a very large installed base in order to develop product usage and associated services. In this case, the value for the solution publisher comes from their installed base, or the large number of users, plus any additional services the publisher can monetize.


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