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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In today's dynamic cloud landscape, software companies are increasingly facing a critical question: how should they price their solutions when supporting multiple cloud environments? This challenge is particularly complex for open source SaaS providers who must balance accessibility, value delivery, and sustainable revenue models while offering the cloud flexibility customers demand.
The Multi-Cloud Reality: Why It Matters
Organizations are embracing multi-cloud strategies at an unprecedented rate. According to Flexera's 2023 State of the Cloud Report, 87% of enterprises now have a multi-cloud strategy. This shift isn't merely a trend—it's a strategic response to avoid vendor lock-in, optimize costs, leverage best-of-breed services, and ensure business continuity.
For open source SaaS providers, supporting multiple clouds represents both an opportunity and a pricing dilemma. How do you create a pricing structure that reflects the added value of cloud portability while keeping your solution competitive?
Common Pricing Approaches for Multi-Cloud Support
1. Cloud-Agnostic Flat Pricing
Some providers opt for simplicity by offering a single price regardless of which cloud platform customers use.
Pros:
- Simple to understand and communicate
- Administratively straightforward
- Appeals to customers who value predictability
Cons:
- Doesn't account for varying costs across cloud providers
- May leave money on the table when delivering higher value
Real-world example: HashiCorp initially used this approach with their enterprise products, charging the same regardless of underlying infrastructure.
2. Cloud-Specific Pricing Tiers
This model acknowledges the reality that supporting different clouds incurs different costs and delivers different value.
Pros:
- Better reflects your actual costs
- Can be aligned with the value proposition for each cloud platform
- Allows for strategic pricing based on market demand
Cons:
- More complex for customers to understand
- Requires maintaining multiple pricing structures
- May create perception issues if price differences are significant
Real-world example: Many database-as-a-service providers charge differently for AWS, Azure, and GCP deployments based on their underlying costs.
3. Base + Cloud Add-On Model
A hybrid approach where you establish a base price for your core service, then charge add-on fees for each additional cloud platform supported.
Pros:
- Clearly communicates the value of multi-cloud support
- Allows customers to pay only for what they need
- Creates natural upsell opportunities
Cons:
- More complex than flat pricing
- May create adoption friction for true multi-cloud usage
Real-world example: MongoDB Atlas offers a base pricing model with different rates depending on which cloud provider you deploy on.
4. Usage-Based Multi-Cloud Pricing
This approach charges based on actual usage across different clouds, potentially with different rates per cloud.
Pros:
- Directly ties costs to value received
- Accommodates hybrid cloud architectures naturally
- Allows for granular optimization
Cons:
- Less predictable for customers
- More complex to implement and explain
- May require sophisticated billing systems
Real-world example: DataStax Astra offers usage-based pricing that varies slightly between supported cloud platforms.
Key Considerations for Your Multi-Cloud Pricing Strategy
Value-Based Pricing Principles Still Apply
While multi-cloud support adds complexity, the fundamental principle remains: price based on value delivered, not just your costs. Research by McKinsey suggests that companies using value-based pricing achieve 5-10% higher returns than those using cost-plus models.
Ask yourself:
- How much does cloud portability and avoiding vendor lock-in matter to your target customers?
- What premium would they pay for this flexibility?
- How does your multi-cloud support compare to alternatives in the market?
Consider Your Customer's Cloud Journey
Different segments have different multi-cloud needs:
- Cloud Migrants: Moving from on-premises to their first cloud
- Cloud Optimizers: Looking to leverage the best of each cloud
- Risk Mitigators: Seeking redundancy and negotiating leverage
Each segment may value multi-cloud capabilities differently and have different willingness to pay.
Factor in Your Operational Reality
Supporting multiple clouds increases operational complexity, requiring:
- Broader technical expertise across engineering teams
- More testing environments and CI/CD pipelines
- Additional security and compliance considerations
- More complex support capabilities
Your pricing should reflect these realities while remaining competitive.
The Open Source Factor
As an open source provider, your pricing strategy exists within a unique context:
- Community expectations around accessibility
- The existence of your free open source option
- Potential for self-hosting across clouds without your managed service
According to the 2023 Open Source Index report, 89% of companies are now using open source software, but monetization models continue to evolve as the market matures.
Recommended Approaches Based on Maturity Stage
Early-Stage Companies
If you're just establishing your market position:
- Start simple - Consider a cloud-agnostic model that eliminates decision complexity
- Focus on adoption - Minimize pricing friction for multi-cloud usage
- Collect data - Learn which clouds your customers prefer and why
Growth-Stage Companies
As you scale and better understand your market:
- Segment by use case - Different vertical industries have different multi-cloud needs
- Introduce tiered options - Create good/better/best packages that include varying levels of cloud support
- Test price sensitivity - Experiment with different models for new customers
Established Players
For companies with significant market presence:
- Align with enterprise buying patterns - Consider ELA (Enterprise License Agreement) models that include multi-cloud as part of broader packages
- Create specialized offerings - Develop industry-specific solutions with appropriate multi-cloud pricing
- Partner with cloud providers - Explore marketplace relationships that create win-win economics
Implementing Your Multi-Cloud Pricing Strategy
When implementing your chosen approach:
- Clearly communicate the value of multi-cloud support in marketing materials
- Train your sales team to articulate the benefits of hybrid cloud flexibility
- Create easy migration paths between different cloud deployments
- Consider promotional pricing for customers willing to deploy across multiple clouds
- Regularly review cloud provider costs to ensure your pricing remains profitable
The Future of Multi-Cloud Pricing
The multi-cloud landscape continues to evolve. Several trends will influence pricing strategies in coming years:
- Cloud-native architectures making portability more achievable
- Standardization of APIs reducing the technical cost of multi-cloud support
- Edge computing extending the definition of "cloud" beyond the big three providers
- AI/ML deployments creating new specialized cloud environments with unique pricing considerations
Conclusion
There's no one-size-fits-all answer to pricing multi-cloud support in open source SaaS. The best approach aligns your pricing with the value customers receive from cloud portability while reflecting your operational costs and market positioning.
Start by deeply understanding your customers' multi-cloud motivations, then experiment with models that balance simplicity with value capture. Remember that pricing is a journey—the right strategy will likely evolve as both your offering and the cloud landscape mature.
By thoughtfully addressing the multi-cloud pricing challenge, you can create a sustainable business model that delivers value to customers while fueling continued investment in your open source foundation.