SOLARWINDS CORP

Pricing Strategies for Cybersecurity Products and Services

• Subscription Models

  • SolarWinds is actively transitioning its maintenance base to a subscription model, which allows for ongoing discussions about value with customers. This transition is noted as not merely a business model shift but a "value model transition" aimed at increasing customer engagement.
  • The company reported a strong performance in subscription revenue, growing by 30% year-over-year, indicating robust adoption of the subscription model.

• Value-based Pricing

  • The premium package offerings incorporate generative AI capabilities such as automated runbooks, which are part of the pricing strategy focused on delivering significant value to customers.
  • Customers are seeing an increase in average selling price (ASP) as they opt for more sophisticated solutions, reflecting a shift towards value recognition.

• Industry-specific Needs

  • By focusing on consolidating customer tools and providing hybrid visibility, the strategy caters to a diverse customer base spanning on-premises and cloud environments. This addresses the specific needs of varying sectors facing costs and complexities from multiple vendors.
  • The Observability solutions, particularly designed to address hybrid observability gaps, underscore how SolarWinds tailors its offerings to industry demands.

• Consumption-based Models

  • While consumption-based pricing models are under consideration, the company has indicated that it is not ready to incorporate these into its pricing strategy at this time. There is, however, an acknowledgment that market trends may lead to the exploration of these models in the future.

Summary

Overall, SolarWinds is adopting a multifaceted approach to its pricing strategies, prominently featuring subscription and value-based models while considering industry-specific requirements and potential shifts towards consumption-based pricing in the future. The transition reflects a responsive strategy to market demands and customer preferences, ensuring ongoing engagement and a robust revenue model.