Azure Marketplace Pricing Models Explained

Explore the three key pricing models for SaaS solutions on Azure Marketplace, tailored to various business needs and usage patterns.

Julia Do Prado

Head of Marketing

Azure Marketplace offers three main pricing models for SaaS solutions, each tailored to different business needs:

Fixed Plans: Monthly or annual subscriptions with predictable costs. Ideal for consistent usage.
Pay-As-You-Go: Charges based on resource usage (e.g., bandwidth, API calls, storage). Best for fluctuating demand.
Seat-Based Pricing: Costs tied to the number of active users. Perfect for team-based tools.

Key Setup Tips:

Once a pricing model is chosen, it cannot be changed.
Use Azure's metering service for usage-based billing.
Ensure user access and billing are managed via Microsoft Entra ID.

Quick Insights:

Fixed plans suit enterprise customers with steady usage.
Usage-based pricing aligns with variable demand patterns.
Seat-based models scale with team size.

These models help publishers meet customer needs while managing revenue effectively. Choose the right one based on your product's usage patterns, target audience, and revenue goals.

Building for marketplace: Choosing the best billing model for ...

Azure Marketplace Pricing Models

Azure Marketplace

Azure Marketplace offers three main pricing models for monetizing SaaS solutions. Each model caters to different usage patterns and customer needs.

Fixed Monthly and Annual Plans

This model charges customers a set fee - either monthly or annually - regardless of how much they use the service. It works well for software with consistent resource usage and provides:

Predictable income
Simplified billing processes
A clear value offering
Options for discounts on annual subscriptions

Publishers can create multiple pricing tiers (e.g., Basic, Professional, Enterprise), each offering different features and price points. However, all plans under the same offer must follow the same pricing structure, though prices can vary across regions.

Now, let’s look at a usage-based pricing model.

Pay-As-You-Go Pricing

Pay-as-you-go pricing charges customers based on their actual resource usage. This model relies on specific usage metrics, such as:

Usage Metric	Description	Common Applications
Bandwidth	Data transfer volume	Content delivery services
API Calls	Number of requests	Integration platforms
Storage	Data storage amount	Backup solutions
Processing Time	Compute resources used	Analytics tools

This approach ensures customers are billed only for what they use, making it ideal for solutions with fluctuating or seasonal demand. Publishers must use Azure’s metering service to track and report usage accurately. Additionally, this model can be paired with a base subscription fee for added flexibility.

Lastly, let’s explore a model tailored for team-based applications.

Seat-Based Pricing

Seat-based pricing charges based on the number of active users accessing the software. This model is a great fit for tools like team collaboration platforms or enterprise applications where more users mean more value. Key factors to consider include:

Defining user roles clearly
Setting minimum and maximum user limits
Offering bulk pricing options
Managing user access through Microsoft Entra ID

Once a pricing model is chosen, it cannot be changed, and all plans within the same offer must stick to the same structure. This makes selecting the right model critical for long-term success.

Azure Marketplace supports various payment methods, including Enterprise Agreements, credit cards, and monthly invoicing, ensuring flexibility for customers and steady revenue for publishers.

Setting Up Your Pricing Model

Fixed Plan Setup

Follow these steps to configure billing terms and payment schedules:

Create Your Plan
Go to the Plan overview tab and click "+ Create new plan." Then:
- Assign a unique plan ID (up to 50 characters).
- Set a plan name (up to 200 characters).
- Add a detailed description of the plan.
Configure Market Availability
Click "Edit markets" to choose the regions where your plan will be available. You can select between 1 and 141 markets. When choosing markets, consider factors like local currency support, regional compliance, and demand.
Set Up Billing Terms
Define your pricing model with these billing options:
- Monthly (1-month)
- Annual (1-year)
- Extended (2-year or 3-year plans)
Each term supports only one payment option, and once published, the pricing model cannot be altered. All plans must follow a consistent pricing structure.

Finally, integrate Azure's metering service to enable usage-based billing.

Usage-Based Billing Setup

Azure's Marketplace metering service lets you bill customers based on their resource consumption. Here's how to set it up:

Define Billing Dimensions
For each billing dimension, provide:
- A unique identifier.
- The unit of measure.
- Price per unit.
- Any included quantity covered by the base fee.
Set Up Usage Tracking
Use the Marketplace metering service APIs to monitor and report usage. You can configure up to 30 billing dimensions for a single offer, offering flexibility for different billing needs.

If your solution charges per user, consider setting up seat-based plans.

User-Based Plan Setup

Seat-based pricing works well for team-focused solutions where costs scale with the number of users. Here's how to configure it:

Define User Parameters
Establish the pricing structure by specifying:
- Minimum user requirements.
- Maximum user limits.
- Price per user for each billing term.
Configure Access Controls
Use Microsoft Entra ID to manage user authentication, enforce role-based access, and track seat usage.

Before launching, thoroughly test your setup in a development environment to ensure everything works as intended.

Selecting Your Pricing Model

Decision Criteria

When choosing a pricing model, consider factors like how your product is used, your target audience, and your revenue goals.

Product Usage Patterns

Look at how customers interact with your product, how much they use resources, and whether their needs are likely to grow.

Target Market

Large enterprises often prefer predictable fixed costs.
Small businesses might lean toward flexible pay-as-you-go options.
Be mindful of any compliance requirements specific to your market.

Revenue Goals

Factor in the cost of acquiring customers.
Account for Azure Marketplace fees if applicable.
Think about the potential long-term value of each customer.

These elements will help you pinpoint the pricing model that suits your business.

Selection Guidelines

Using the criteria above, match your pricing model with these practical approaches:

Fixed Monthly/Annual Plans Are Best For:

Solutions with consistent usage patterns.
Applications aimed at enterprise customers.
Products with steady operating costs.

Usage-Based Pricing Works Well For:

Apps that consume significant resources.
Products with fluctuating usage patterns.
Services where costs scale with consumption.

Seat-Based Models Make Sense For:

Tools designed for team collaboration.
Applications tailored to specific roles.
Solutions focused on individual users.

Let’s explore some examples to see how these guidelines apply.

Example Scenarios

1. Enterprise Data Analytics Platform

A data analytics service uses tiered fixed pricing, offering:

Base tier: $2,000/month, which includes 1TB of storage.
Premium tier: $5,000/month, which includes 5TB of storage.
Custom enterprise tier: Pricing is negotiated for 10TB or more.

2. Development Tools Platform

A DevOps platform combines subscription and usage-based pricing:

Base subscription: $500/month.
Usage charges: $0.05 per build minute.
Additional storage: $0.10 per GB beyond the included quota.

3. Team Collaboration Software

A project management tool adopts a seat-based pricing structure:

Basic plan: $15 per user/month (minimum of 5 users).
Professional plan: $25 per user/month (minimum of 10 users).
Enterprise plan: Custom pricing for teams with 50+ users.

Increasing Revenue on Azure Marketplace

Package Deals and Extra Features

Offering bundled deals and additional features can help increase revenue on Azure Marketplace. For instance, you can combine core services with premium add-ons that customers find useful. A common example might be including a base storage allocation with the option to purchase more storage at tiered pricing.

Here are some add-on ideas:

Premium support tiers with guaranteed response times
Advanced analytics or detailed reporting tools
Integration options for other Azure services
Specialized training or onboarding programs

Design your packages to balance flexibility and profitability. Basic plans should cover essential needs, while premium tiers can include advanced features that justify a higher price.

Enterprise Pricing Options

Enterprise clients often require customized pricing plans. Azure Marketplace makes this possible through private offers, which allow for tailored solutions and pricing designed to meet the needs of larger deployments.

Key considerations for enterprise pricing:

Discounts based on user count or resource usage
Custom service level agreements (SLAs)
Dedicated support channels
Long-term contract options

When working with enterprise customers, focus on pricing that reflects the value your solution provides to their business. This could include offering advanced features or enhanced security designed to meet enterprise-specific needs.

Price Testing and Updates

Fine-tuning your pricing strategy is essential for driving revenue. On Azure Marketplace, price reductions become effective on the first day of the next month, while price increases require a 90-day advance notice. Existing customers on current contracts will retain their pricing until renewal. Any price changes must go through a complete certification process.

To ensure a smooth transition, avoid making multiple offer adjustments at the same time. Instead, align price changes with billing cycles and notify customers well in advance to maintain transparency and trust.

Conclusion

Setting up pricing models on Azure Marketplace requires careful planning and thorough cost evaluation. The platform supports various pricing options - like fixed monthly or yearly plans and usage-based billing - giving publishers the tools to address customer needs while staying profitable.

Here are some key steps to consider:

Start with a detailed cost analysis: Calculate all your expenses, including Azure infrastructure and licensing fees, to establish a pricing structure that works for your business.
Incorporate metered billing: Combine base pricing with usage-based charges to better align your revenue with how customers actually use your product.
Leverage Partner Center analytics: Use the data provided to refine your pricing decisions and ensure they are backed by solid insights.

By following these steps, you can create a pricing model that meets customer expectations and supports your revenue goals. Remember, price reductions take effect the next month, while increases require a 90-day notice period ^[1].

Use market data and customer insights to keep your pricing strategy effective and competitive on Azure Marketplace.