Monetization of the cloud: how to attract customers and not go broke

It's easy to believe that VSaaS sells itself. In ideal conditions, by connecting one camera and receiving an affordable cloud-based video surveillance service, the client quickly understands how it all works and goes to connect paid tariffs. He adds new cameras and services, works with video analytics, solves more and more of his tasks, and recommends VSaaS to friends and partners.

In fact, on this way, any network service provider will face challenges that nobody actually likes to talk about, although the cloud business runs into them almost daily. These challenges predictably concern money. The most important and difficult task is how to count and sell the cloud, doing well for both the user and himself.

Billing and billing as the first stage of migraine

VSaaS consists of several components, among which are the direct broadcast of video from cameras, video hosting, intelligent analytics and a set of additionally connected services. The number of available functions and modules is increasing year after year, and this is good for the user. But their abundance can cause difficulties for providers in shaping the right pricing policy.

Each VSaaS service has its own billing unit, connection and renewal mechanics, and requires separate accounting. For example, the payment for the cloud archive service is calculated based on its depth, that is, the period of storage of records, and analytical services are charged according to the number of transactions.

We at Ivideon set a time limit only - for example, over the past 30 days, regardless of the volume of traffic, although we pay data centers for terabytes. Some cloud providers tie the cost of tariffs directly to the volume of traffic. And this traffic is generated by video surveillance services a lot!

An IP camera with a resolution of 640x480 and 25 frames / second (H.264) with constant recording with an average traffic intensity in the frame per day generates 11 GB of video data. For the same camera, with very heavy movement in the frame, the traffic volume is approximately 450 MB per hour.

However, a camera with a resolution of 640x480 is now the exception rather than the rule. Everyone wants to see a good picture - at least 2 MP. The result is gigantic traffic! In 2016, Martin Gren, co-founder of Axis Communications, a well-known video equipment manufacturer , said that all of YouTube is an analogue of only 16,000 channels / cameras, which is quite a bit by the standards of video surveillance systems.



By traffic or by days of use, you can consider the most popular VSaaS module - video analytics. But we went the other way and tied the face recognition module to the number of transactions. An example of a transaction in the case of Face Recognition is face recognition and its comparison with the person database.

Why don't we use a “common denominator” for all services and tariffs? Because this is a real headache - it is impossible to compare the square with the soft. The range of services is too wide and is constantly growing, but the range of tariffs should remain clear and transparent to the user.

Cloud services today often follow the trend, when customers are offered three, maximum four tariffs. The simplicity of such a solution is deceptive and will not suit customers who have thousands of cameras installed and connected to the service.

Our billing includes individual sets of options. Sometimes it’s better to generate more different tariffs from different services, for different customers - and this will be more convenient for the user. For example, on the site we offer a maximum video storage period of 60 days. At the same time, for some customers, they prepared individual tariff plans with a shelf life of several years.

It is convenient for the user to choose a tariff with a clear form of payment: for example, to make a fixed amount on a monthly basis. For this to be possible, the VSaaS provider needs to tidy up the scattered services and develop a tariff line without sacrificing its billing system.

“Sacred Cow”: how to cut it alive and not kill anyone when charging

The “sacred cow” of providers of various Internet services is convergent billing, that is, such a payment system in which the service is able to bill a customer a single bill for many different services paid in advance or upon use. Moreover, it does not matter what acts as a unit of measure for the service - minutes or bytes.

It is sometimes impossible to build a single payment model from disparate “blocks”. The VSaaS product that the user receives consists of dozens of "ingredients." For example, we at Ivideon involve third-party service modules and hosting in several data centers.

With different suppliers, we have established various settlement models - with someone using the pay-as-you-go model (the payment scheme for consuming cloud resources “pay only for what you used”), and someone charges a fixed amount monthly. We work with clients according to the prepaid model.

Prepaid - a method of settling with a provider, in which the user first deposits the amount into the account.

Choosing one model, the provider to some extent becomes her hostage. It is not always possible to turn 180 degrees and change the model from prepaid to pay-as-you-go in a short time. Perhaps the market dictates that now it is necessary to sell the service in a different way, but changing something can be very difficult.

Like all B2B service providers, we work with legal entities, and in the additional agreements to the contracts we have the exact numbers that the user pays for a specific period. When moving from one model to another, someone will become more expensive, someone cheaper, and we will have to explain to everyone.

Plus, there are partners who use our billing and face the same problems. We are also associated with them by contractual relations. Taking into account the size of our user and partner bases, this is an incredible amount of contractual and organizational work. But there are also technical aspects: implementation and verification of the necessary mechanisms, counters, metrics. As a result, a tremendous stress for the business, which can seriously affect the profitability indicators for the period, even if it will bring benefits in the future.

How we set prices or what you pay for by purchasing a cloud subscription

The billing system of VSaaS providers is closely related to accounting and management accounting. It serves as one of the main sources of data allowing the formation and adjustment of tariffs. An incorrectly constructed system and incorrectly collected data will not allow you to make accurate forecasts and affect the sales of services.

If a mistake is made somewhere, the provider simply will not be able to understand how much money one user brings to him, and if he does not work at a loss. As a result, he will not be able to form a profitable tariff for himself and the user.

The service usage profile is not equal to the tariff. A user who writes to the cloud 24/7 costs us more than a person with the same rate, whose camera "comes to life" once a day, when the door slams from the wind. Thus, two users with the same tariff cost us different amounts, therefore, we will receive different profits.

The usage profile fits into the tariff only with some approximation: in pay-as-you-go it is closer than in prepaid, but there is no direct correspondence anyway. The provider may incur losses due to inconsistencies, and the user may overpay. Therefore, one of the key tasks of billing is to ensure that service usage profiles and tariffs do not contradict each other.

You can go the "easy" way: often change the cost of services, refuse popular tariffs for customers as soon as problems arise with them, and generally complicate the payment system for the user. All these measures will really help to solve the problems of the provider, but they do not reckon with the convenience of customers, and the logic suggests that it is easy to lose user confidence, and it is more difficult to regain it.

Another way requires forecasting skills and the ability to solve atypical tasks. This allows you to prepare in advance for possible difficulties. Ivideon Affiliate Programfor vendors, distributors, integrators. Keeping records of one "own" user and several "partner" ones are two different tasks. Simply put, in each case, it is necessary to correctly calculate who, whom and how much should.

Thinking in advance about how to develop the service in terms of interaction with agents, we took a large “piece” of back office specifically for this account. If you do not think over such aspects of the work, they turn into “bottlenecks” that become a real problem.

Customers have the right to demand and want something special.

Cloud surveillance is used by home users, small, medium and large businesses; gas stations, small shops and entire retail chains - they all deploy video surveillance systems, and each client has its own tasks, priorities and needs.

For small businesses, for example, price is often the determining factor in choosing a tariff, and the possibility of customizing a package is more important for large enterprises. High-tech industries require unique analytical services, and synchronization with the corporate local system is important for banks. Ideally, a VSaaS provider should provide each client with what it asks for.

It is necessary to take into account regional features. In different markets, services are perceived differently. What we can offer in Russia as a paid service is a given for American users. The reason is that the US market is oversaturated: if companies like Wyze Cam come out with an offer of perpetual and free storage, the same cloud archive no longer looks for the user something unique.

Various requests require flexibility in service from VSaaS providers - this should be set up. In order to create a service universal in terms of quality, it is necessary to simplify the connection of new modules and to predict usage scenarios in each segment.

For small businesses, the price is important - it means that you need to prepare an affordable tariff that solves the problems of this segment and can compete with alternative offers. For example, for retail, we came up with a business management tool - video analytics - at a price of 1,700 rubles. behind the camera for face recognition.

The user understands the value of the service package for his company and is ready to connect it. The provider’s task is to prepare as many packages as possible for different types of businesses, based primarily on whether they are useful and whether they solve a specific problem.

As for the convenience of connecting the modules, it is important to simplify this process as much as possible so that the user can try a new service and, if necessary, easily refuse it (he may refuse some services, but find in this way what he really needs, - without fear of marketing tricks).

Another useful tool for different types of users is progressive discounts. They allow customers to save when paying for a large number of devices, and the provider - to encourage users with systems of different sizes.

Meat Grinder Competition: Flexibility, Alliances, Innovation

One company engaged in medical analysis built a video surveillance system with the help of our competitors, but was unsatisfied with the user experience. For a long time, the company negotiated with us, and its supplier at the same time lowered the price lower and lower in order to save the client.

The situation was complicated by the fact that the system was used at hundreds of locations across the country, and migration seemed too complicated. As a result, the company remained on the old decision - albeit inconvenient and unsatisfactory for the client. The provider itself suffered from poor-quality services - although he won in the moment, he could not solve the client’s tasks and, most likely, spoiled his reputation, which slowed down his own development.

Players who are backed by large investments can afford to lower the price of their services for a long time, even to the detriment of the quality of post-service. But at the same time, such companies are too slow to develop individual solutions. And just enough to make a quality product at the request of any client and thus withstand competition.

For example, we have various offers not only for large and small enterprises, but also for kindergartens, fitness centers, banks, business centers and other facilities. It is clear that at construction sites the safety and security of materials is important, and in beauty salons they pay great attention to customer service. Based on this, we offer individual types of companies various solutions that close their priority tasks.

Another way of healthy competition is through alliances. Ivideon as a platform for cloud video surveillance and analytics is fundamentally open for partnership with manufacturers of cameras, smart home kits, security systems and other equipment. We work with Dahua and Hikvision, Axis Communications, the British developer of ACS Paxton, Hanwha Techwin (Samsung), Russian developers of software and hardware systems OPS - Bolid, Teko and others.

And the last weapon in the space of proper monetization is innovation. The requirements of users for analytical tools in video surveillance are growing, therefore, those providers who rely on innovative services and integration with other vendors and systems are more likely to gain a foothold in the market.

Developing new services is also a good way to attract funding. Investors pay attention to many parameters when evaluating companies. The “powerful” service in the inventory of the VSaaS provider can be a decisive factor for them. Our practice shows: with investments to cope with any market challenges and hone the "flexibility" of the service becomes easier. Although responsibility is growing.

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Balancing between the interests of a user who, at first glance, always wants a lower price, and his own needs, formed by the eternal truth “business should be profitable,” there is a great temptation to start saving on the quality of equipment and services. This is a trap, victims of which are both sides of the transaction. The balance problem in the VSaaS-market is solved simply: create a convenient and high-quality service for the user, realize the functions that customers need, and remain stable in the quality of services.