There’s been a big movement to cloud and the adoption of SaaS in recent years, and in this context, there is a major shift happening from Information Technology (IT) to Business Technology (BT). BT differs from IT in the scale of apps, speed, agility, and being business impact driven. Companies successfully making this shift thrive and become category leaders, and the ones that do not, fade away. We have written about these challenges and the new approach to automation required to enable such a shift via an Enterprise Automation Platform.
We created Workato with one mission – to drive enterprise-wide automations at large scale across organizations globally, with a beautiful experience, a powerful feature-set, and a community powered approach that business and IT users can understand and buy into.
We have seen the magic that happens with enterprise-wide automations at scale and their transformative impact on global brands and innovative companies like Slack, Nutanix, Coupa, Grab and others. Despite this, given the magnitude of the shift to Business Technology that must occur and the stakes involved, we believe we must do more to catalyze such a movement. It has become clear to us that this is not just about the technology. We believe customer-centered pricing that inspires large-scale use is essential as well to large-scale adoption of automations in organizations.
We are excited to launch our dramatically simple, “unlimited” fair use pricing to help accelerate and catalyze this shift from IT to BT. This is what it looks like:
You start with a workspace that costs $10K and includes all of the capabilities required to integrate applications and automate workflows across them. And then you would add the required number of automations (recipes) to this workspace and get going. It’s that simple!
There are no limits to the number of apps integrated, number of tasks, number of connections, number of jobs or number of users.
More on this below, but first, how did we come up with this “unlimited” pricing approach and why do we think it will work? Net, it goes beyond consumption or usage based pricing. Modern, serverless enterprise platform products are all priced on different measures of consumption. It is about taking a customer-centric approach to remove the fear and unpredictability around costs for organizations to be able to apply a platform like Workato at a large scale across their organizations.
Unpredictability of costs in enterprise software pricing
Enterprise software pricing follows a familiar pattern – variations of a tiered plan-based approach to segment customers by features and by a variety of usage metrics depending on the type of product and segment. It is designed to be profitable with each customer via pricing structures to capture revenues proportional to the value provided.
Consumption or usage-based enterprise pricing seems simpler, but it does not always make it easier to predict how much the service will cost you. Some metrics like employees, agents or users are easier to predict than those around workloads like compute or tasks. How often, for example, are we surprised by our AWS bills? When there are not one but multiple usage metrics and thresholds, it becomes even harder to predict which ones will trip you up.
Integration and automation platforms are notoriously complex and unpredictable for pricing (we created some of these products in the past), with tiers of features and usage thresholds based on multiple metrics — the number and types of apps connected, tasks, jobs, connections, the number of users and, for traditional integration products, also servers or cores or atoms.
Server based pricing of the older integration products is worse. You buy capacity that is dedicated to you in the cloud or on-premise that sits unused most of the time. It is also expensive. How much integration load can a core or server handle before you have to buy another one? Likely not a lot. The Macbook Pro I’m writing this article on has four cores.
Having spent time in the consumer software world, enterprise software pricing often feels like it was designed with an internal viewpoint versus a customer-centric approach – it seems to make more sense for the vendor’s GTM organizations than for the customer.
Workato’s pricing to date
There has been much debate about how to price innovative products, with most vendors landing on something like: “Innovate on product, not on pricing.” The rationale is that it’s hard enough for customers to grok your new age product, so you should at least keep the pricing familiar. At Workato, we certainly took this approach originally.
Workato’s pricing to date was still structurally similar to that of the other automation products on the market — tiered plans with different levels of features and thresholds of capacities for tasks and endpoints connected.
As we grew, a common concern customers expressed about our pricing was that they had no idea how many tasks or connections they needed for a given project or which of our plan tiers to start with. Tasks and connections felt like an involuntary side effect of doing more projects on Workato. We saw firsthand that this uncertainty and doubt often created friction at the time of initial purchase as well as when customers contemplated doing new projects.
Over the past few years, as the enterprise automation space has picked up steam, and we saw the transformative impact on organizations that adopt automations at scale. We began to see that besides a great product, we also needed a pricing model that unblocks organizations to truly leverage automations at a large scale across their business.
We also believe that pricing more deeply reflects the core values, culture, and mission of a company, certainly from a customer standpoint, than any marketing can. Pricing pretty much shows up as most clicked upon item on the heatmap of vendor websites.
Learning from the consumer world
As we debated this challenge that we had posed for ourselves, I thought back to my days at Qik, a mobile live video-sharing app in the consumer space that was acquired by Skype about 10 years ago. Our competitors had a 10-minute limit on the videos users could record. At Qik, we wanted to enable our users to connect in real time with their friends and family without the fear of being cut off, so we decided to not put any limits on the length of videos.
The freedom of ‘unlimited’ … powered, at least in part, our growth.
It was a bit scary and a leap of faith. It meant potentially storing insanely large amounts of video and Qik was a freemium app with less than 5% of customers paying $5/month for premium features (we did become profitable by 2009!).
The freedom of “unlimited” was really well received and it powered, at least in part, our growth from just over a million users to over 20 million within a year. A few months in, when we looked at the usage data, we found that while there were some people streaming hours-long parties and live-streaming their entire Tokyo marathon with an early-model iPhone mounted to their hat, most users were not. Had we actually limited our users to 10-minute videos, the average length of all Qik videos would only have dropped by just 6%. Eliminating this concern and having our users enjoy an unfettered experience with Qik certainly increased the number of users, and it was well worth any economic tradeoff.
The core ethos in the consumer space was and is about driving massive scale, global adoption with a beautiful experience, compelling features and dead simple pricing that hundreds of millions of users can understand and opt into. This very much mirrors Workato’s mission and ethos around enabling wall-to-wall automation and impact across all kinds of companies and industries around the world.
It is here that we see a fundamental break between B2C and B2B software pricing. Nearly all of the greatest successes in consumer software have come from driving success with customers on a massive scale and not from trying to optimize pricing for each use of the product. It is time to put the customers first in order to truly make a dent in the huge enterprise automation gap companies face globally.
Introducing ‘unlimited’ pricing that is as easy as our product
We are excited to launch a dramatically simple and fair use pricing model, that takes less than 30 seconds to explain and understand.
You start with the Workato Workspace, which comes with the industry-leading iPaaS, Workflow Automation, and Workbot capabilities with no limits on the number of apps, tasks, jobs, connections, or users. There are also no servers or cores to buy and operate. Workspace has built-in robust security and governance and comes with the world-class customer support we are known for.
From there, you buy the number of active (running) recipes you will need in your Workspace. That’s it!
To make it even easier, our recipe pricing is both fair use and flexible use, so you pay for what you will use and you will never run out of capacity.
- With our fair use pricing, if you buy more recipes than you use in the year, unused recipes will be rolled over to the next year (a bit like your cell-phone rollover minutes).
- With our flexible use pricing, you can go beyond the active recipes you bought and true up every quarter.
Recipes are priced based on volume. At scale, they would cost $1K per active recipe per year. There are options like API management and advanced recipe management for customers that want to go beyond automations, but a Workato Workspace comes with all the features customers need to start integrating and automating their workflows across their business.
We believe this pricing … is actually essential to fulfilling our mission.
One of our long-time customers summarized it well: “The recipe pricing is really simple and feels voluntary or opt-in compared to something like tasks or connections. Recipes correspond directly to individual automations that the business teams come to me with, and they already know the value of those.”
A leap of faith?
There was anxiety and a lot of questions as we converged on this model and tested it out:
- Wouldn’t we leave a lot of money on the table with high value, high impact automations like order-to-cash or employee onboarding?
- Wouldn’t we lose money on automations that process millions of tasks per month?
- How can SAP or NetSuite integrations cost so little when they are so complex to integrate with?
- Did you notice our business grew 4X since last summer! If it ain’t broke … ?!. etc.
To all of these questions, there is just one answer and one true north principle. We aim to drive large scale use of recipes to enable wall-to-wall automation for large numbers of customers globally, much like great consumer software and services. We strongly believe that unlocking and accelerating digital transformation at scale within companies and across the industry will drive huge success for all.
At the beginning of this article, I said that we created Workato for one reason: to solve the enterprise-wide integration and automation problem that companies everywhere were facing as the workplace evolved. A big part of solving that problem is fully enabling company-wide, wall-to-wall enterprise automation.
Therefore, we believe this pricing, rather than being a leap of faith, is actually essential to fulfilling our mission.
I have been really fortunate to be surrounded by team members, leadership, and investors who believe just as strongly in this mission, and are fully behind and excited about this change.