The Evolution of Software Pricing and Packaging with Pricing Expert Jason Kap

Sep 5, 2024

Jason Kap, founder and CEO of Blue Rocket and a veteran in pricing strategies, dives into the fascinating evolution of software pricing. He discusses the transformation from bundled hardware to standalone software, leading to today's SaaS and hybrid models. The conversation touches on the challenges faced by early Application Service Providers and the rise of cloud pricing. Jason emphasizes the importance of transparency and adapting to customer needs, while offering insights on how CFOs can navigate the modern pricing landscape in the age of AI.

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ANECDOTE

Hardware-Software Bundling

In software's early days, hardware and software were sold together.
Software was specific to the hardware model, not just the maker.

INSIGHT

Software's Unbundling

Initially, software sales transitioned from hardware bundles to separate products.
Microsoft pioneered selling software compatible with various hardware.

ANECDOTE

Birth of the Enterprise Agreement

Steve Ballmer, upon hearing a client's frustration with tracking software licenses, innovated.
Microsoft introduced the Enterprise Agreement, charging per PC, simplifying licensing.

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After requests for another pricing episode, CJ sits down with returning guest Jason Kap, the founder and CEO of Blue Rocket, a long-tenured Microsoft leader, and an expert in pricing and packaging. Together, they take a deep dive into the evolution of software pricing, tracing its journey from the early days of buying hardware and software together to buying software separately, and all the way through the eras to the emergence of SaaS and today’s usage-based and hybrid models. Jason provides a detailed look at the shifts in the industry, including the rise of application service providers and outsourced infrastructure. As they discuss the current landscape, they highlight the importance of transparency and value abstraction. Then they look to the future with advice on how CFOs can navigate pricing in the new era of AI. Packed with practical insights, this episode offers a comprehensive guide for anyone looking to understand the past, present, and future of software pricing and packaging.

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@cjgustafson222 (CJ)

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TIMESTAMPS:(00:00) Preview and Intro(02:26) Sponsor - Planful | Mercury(04:51) Hardware and Software Sold Together(08:11) Software Sold for Hardware(11:48) The Origins of the Enterprise Agreement(15:44) Sponsor - NetSuite | Maxio | Leapfin(18:42) Application Service Providers(23:00) The Evolution of AWS, Google, and Salesforce(27:06) Outsourced Infrastructure and SaaS(33:54) Adobe as the Prime Example of Moving to SaaS(36:32) The Financial Implications of Transitioning to SaaS(38:46) Shelfware in the Next Wave(41:01) Usage-based Pricing(44:25) The Hybrid Model(48:29) Tips for Billing and Overages(52:14) Predictions for the Next Wave: How to Price AI(54:18) Wrap

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