Choosing a DaaS provider: Subscription vs. Consumption pricing

There are all sorts of different pricing models out there, from hourly, to freemium, to more complex types, including dynamic and penetration pricing. Companies looking for a desktop-as-a-service (DaaS) offering to facilitate remote work or other use cases, however, typically only need to have two models in mind: Subscription-based or consumption-based.

What’s the difference between subscription- and consumption-based?

That’s because most DaaS players offer either one or the other. But what’s the difference between subscription- and consumption-based (also known as “usage-based”) pricing?

1. At its simplest, having a DaaS or virtual desktop infrastructure (VDI) subscription means paying a flat monthly (or annual) fee to access the software. Your fee is the same no matter how much or how little you use.
2. A consumption-based model, on the other hand, means only paying for what you use based on predefined pricing per unit. Billing is typically monthly.

Seems fairly straightforward, right? But while subscription models have been around forever, since at least the 17th century, consumption-based pricing isn’t quite as long in the tooth. It initially appeared back in the 1920s when Michelin offered a pay-per-kilometre tire leasing service. It wasn’t until eighty or so years later, after Salesforce launched its own (soon to be ubiquitous) consumption-based model known as software-as-a-service (SaaS), that the concept went mainstream.

Most DaaS providers have historically offered per-use pricing. But that’s changing as more and more legacy DaaS providers like Citrix and VMWare move their customers toward subscription models, which offer these companies more predictable revenues by locking in customers for months at a time. Annual subscriptions also help buy legacy providers time to add important security and usability features without worrying about customers switching to newer, more agile technologies.

That’s good for legacy DaaS providers, for sure, but not necessarily all that great for their enterprise customers. Here’s why.

Advantages of consumption-based vs. subscription-based pricing

Subscription-based pricing indeed offers relatively easy budgeting through annual payments, allowing clients to plan around these fixed costs. But consider the many advantages of consumption-based pricing for enterprises:

• Pay for what you need, not what you might need: Many legacy DaaS customers get locked into an annual subscription only to discover they’re oversubscribed a month or so later. Most usage-based models also provide very granular costs tied to specific activities, allowing enterprises to tailor their commitment based on what provides the most value. Enterprises can use the assets they need, when they need them, without paying for downtime or when users aren’t active.
• Scale up (or down) quickly, with no BS: Subscribers must often shell out cash for extra storage, add-ons, or processing power just in case. But consumption-based models let you scale up or down quickly and easily (without having to change your subscription plan if you exceed your allotted hours or number of desktops). That’s especially important in today’s volatile and unpredictable business environment, where affordable flexibility is key.
• Get started with less commitment (and fewer barriers to entry): Just like the cloud revolution put pressure on on-premises data centers, the consumption model provides SMEs access to scalable, high-quality resources without massive CapEx or up-front annual payments. Customers also benefit from test-driving the service without having to make a substantial commitment.
• Less hassle: Enterprises can spend more time focusing on their core business instead of dealing with complicated installations, upgrade processes, and maintenance. Customers also benefit from stress-free product upgrades and updates.
• Fewer hidden costs: Subscription-based models often have complicated billing structures riddled with hidden costs, including onboarding, setup, or implementation fees (even though these are usually one-time fees, they’re often significant). Be sure to read the fine print of any tiered subscription plan, as well, to ensure you’re getting the features you need without having to upgrade. If you want to cancel early, you’ll often have to pay a penalty, and many subscriptions include auto-renewals that kick in with no warning.

Real-time monitoring for ultra-optimized DaaS

While subscription-based pricing offers the advantage of always knowing where you stand spending-wise, that benefit is lessening with the advent of real-time monitoring and systems intelligence tools for DaaS and SaaS. That means no surprise bills at the end of the month because companies can use these tools to track their usage down to the minute. With proper monitoring, enterprises can optimize their consumption to the right number of users and requirements while keeping costs well within budget.

Tehama Desktop Intelligence and Automation (DIA)

Tehama’s upcoming real-time monitoring tool, Tehama Desktop Intelligence and Automation (DIA), provides exactly that through live dashboards that monitor all your most essential system metrics. It features real-time incident triggers and alerts based on pre-set thresholds, aggregated and real-time server monitoring, and user experience monitoring preconfigured with industry-standard user experience metrics.

Tehama Desktop Intelligence and Automation is an add-on service that pairs with Tehama’s flexible, consumption-based pricing model. Book a demo for more information on our pricing model. Tehama clients also have the option of subscribing to the service for fixed monthly or hourly rates, because in the end, our goal is to offer customers the pricing option that works best for their business.