FORTINET INC

Pricing Strategies in Cybersecurity Products

• Subscription Models

  • Fortinet emphasizes subscription services, particularly in security operations (SecOps) and Unified SASE offerings, where service revenue grew 19%, reflecting a strong inclination towards recurring revenue models.

• Value-Based Pricing

  • The pricing strategy appears to be influenced by the perceived value customers derive from integrated solutions. Customers appreciate the architectural design of Fortinet's products, which facilitates seamless transitions from traditional firewalls to SD-WAN and SASE solutions.
  • The FortiSASE solution is positioned as a cost-effective and efficient option, leveraging the existing infrastructure of existing customers, allowing for easier upgrades and consolidation.

• Industry-Specific Needs

  • Fortinet targets various sectors, offering tailored solutions like the Sovereign SASE for service providers and large enterprises, which allows customers to maintain data privacy by deploying solutions within their own data centers.
  • There’s an emphasis on verticals like manufacturing and retail, which show resilience and growth, driving Fortinet's expansion strategy.

Key Insights

• The transition and upgrade paths for existing firewalls and SD-WAN customers to SASE is highlighted as a significant growth opportunity.
• Fortinet's strong R&D capabilities, extensive product suite, and integrated system architecture are seen as competitive advantages, enabling them to respond to evolving cybersecurity needs while maintaining stable pricing.
• Competing players in the market have recently focused on discounting and bundling, but Fortinet maintains that discounting trends have remained stable, allowing for ample margins to support both growth and partner incentives.

Summary

Fortinet's pricing strategies for cybersecurity products focus on subscription models, delivering value through integrated solutions that cater to specific industry needs, driving a robust growth trajectory.