We developers, and an industry, should start to rethink how we start designing our Cloud Services. The customer centric design is old news. SaaS entrepreneur Rainer Stropek, whom I met in Berlin, said wisely: “Do pricing like IKEA! First design the price tag.”
While working in my startup Sopima I have learned that there are three reasons for this. I will discuss these findings in TechDays 2011 so please come and listen – you can also ask me questions, for example via Twitter: tweet your questions and comments to me in advance @anttimakkonen and I’ll try to answer you. But now let’s go back to business. Read on how to make the price tag your first priority.
Reason number 1
You will not win your battle for customers by being the nicest and prettiest service of its kind in the minds of the Internet dwellers. Because of Cloud Services like Amazon (IaaS) and Windows Azure (PaaS) there’s more competition on your way and with a speed you are not accustomed to. It is really easy to put up a service once you bypass the initial learning curve of any Cloud provider. Most of the problems you will face when building your service are not technical. Customers are not interested in what technical solutions you have mastered. They want a polished service experience that does the basic stuff extremely well.
Reason number 2
The decision to purchase your service should be almost subconscious for the customer. Customers that are lured into the web page of your service need to understand what the service is and what the cost is, in a short time before they leave the page. Otherwise you just paid for a lead that is not going to transform to a customer.
In software design this means that you need to design the billing of your product in a way that the customer understands what he or she is getting. For example, do not make him pay for upload/download bandwidth but instead the total size of stored files per month. Keep rates simple not complex. You need to work a little extra to calculate what a customer normally needs. Do not force customers do that calculation. In addition, customers do not like surprises in their bills. Lots of SaaS entrepreneurs prefer to sell prepaid credits or similar to get commitment, and some money fast. In my experience it is easier to purchase “packets”, but don’t overdo the number of options. Calculating costs and prices takes us further to the next reason.
Reason number 3
Computing resources and scalability are no longer major investment decisions. You just order what computing resources you need and you can easily cancel that order when you are done with it. Basically you can run as bad code in the cloud as you wallet can stand and your service will still scale. 🙂
In the age of Cloud Computing you need to direct your attention to what cloud service provider is charging you and minimize that cost. After you have made your service stateless, the cost is the only limitation to scale your service up. You need to optimize and monitor your cost structure – and sometimes even make ‘strange’ design decisions, if that helps you to pull your Cloud costs down. This is even more important if your service revenue streams are dispersed and the profit margins are lean.
As a final thought I’d like to say
Consider billing as an integral part of your service. Do not make customer reconsider his purchase on every obscure bill you send. Especially if you are making a subscription service, do not implement your own billing! Trust the professionals and consider using some of the readymade services like these:
PS. I found these tools that will help you on estimating, monitoring and minimizing Azure costs.
- Estimate Azure costs using Azure economics calculator
- Monitoring Azure costs can be done via Microsoft Online Customer Portal
- Minimize Azure costs by autoscaling with AzureWatch
- New service for monitoring Azure SQL costs