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What is Flat-Rate BI?

by | Buying BI

Flat-rate BI is a hassle-free approach to business intelligence pricing. Instead of billing for add-ons or charging based on usage, flat-rate BI makes the full complement of analytics features available for one price

Despite its attractiveness to buyers, this pricing model is hard to come by in the business intelligence space. Usage- and feature-based contracts are so prevalent, in fact, that companies often aren’t even aware of the alternatives. 

The flat-rate model has three significant advantages over its more traditional counterpart. We explore each one in detail so you can better weigh your BI options.

Easier Budgeting

Whether you’re a seed-stage SaaS startup or fully established enterprise solution, it can be difficult to predict exactly how much customer use of your embedded BI offering will scale year over year. Will you hit your sales targets? What percentage of sales will include BI licenses? Will you land a large account and need to buy additional servers to handle the traffic increase? 

When BI costs scale according to usage, forecasting errors can lead to budgeting headaches down the line.

Traditional embedded BI licenses quantify usage in a variety of ways, but the most common are the number of users, types of users, number of servers/cores, or some combination of these. 

Since even the most carefully considered usage predictions will have some margin of error, companies with scaling BI licenses have to build buffers into their budgets just to handle the uncertainty. Too little budget, and they risk causing a fiscal emergency. Too much, and they pay the opportunity cost. 

Executive teams operating with all-inclusive BI contracts, by contrast, can easily and accurately predict what the license will cost each pay period. Because embedded business intelligence is oftentimes one of the company’s top expenses, this dramatically improves budgeting confidence across the board.

A Better Business Relationship

By de-emphasizing the fiscal aspect of the client-provider relationship, all-inclusive BI helps build trust-based partnerships between software providers.

Usage-dependent BI inevitably means having to report to your business intelligence provider on how much you’ve scaled. This puts pressure on you to curb your growth, particularly as you approach the next pricing bracket. The need for oversight can put a damper on the client-provider relationship, particularly if the brackets pose a significant cost increase. 

Then there’s the pressure to upgrade. BI providers generally come out with new enhancements every year, and some use these to lure customers into higher-paying contracts. This reality can make status calls with customer success agents feel like thinly-veiled sales pitches designed to benefit the provider, not advocate for you, the client. 

Flat-rate BI does away with both usage monitoring and upgrade pitches so you and your provider can instead focus squarely on project success factors. No matter how many customers you onboard or which features they use, the price stays the same.

Wider Profit Margins

Last but not least, flat-rate business intelligence pricing models make for significantly higher returns on your investment in the solution. Instead of remaining constant as you scale, your profit margins will widen over time.

Let’s look at this hypothetical scenario for example. BI Solution 1 uses a traditional scaling pricing model whereas Solution 2 uses the all-inclusive approach. Solution 2 is more expensive per quarter at first, but as the client’s income begins to scale, so do its costs.

Flat Rate vs Scaling BI Pricing

By the end of year one, Solution 1 costs as much as Solution 2 per quarter. By the end of year 3, the client would see 50% more cumulative profits using Solution 2 compared to Solution 1. 

This projection assumes that Solution 1 costs increase in direct proportion with the client’s earnings (5% per quarter in this scenario). Even if these increases are not directly proportional, any increase in cost is going to make Solution 2 the better financial choice, all else being equal.

It’s important that companies know their pricing options as they begin exploring embedded BI solutions, particularly when the disparities can have such a profound impact on budgeting, customer-vendor relationship, and profit margins. Exago BI is all-inclusive, and in a recent survey, 74% of respondents agreed that it was “the highest-value embedded BI solution on the market.” Get in touch to learn more.

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