05.12.15 |
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P2P Trends 4 of 5: “Simple, Transaction-Based Pricing” Sells

Could based transactionWhile we are on the topic of the PayStream Advisors webinar “Top P2P Trends for 2015,” the fourth trend PayStream talked about was the pricing model that is becoming popular – transaction-based pricing.

The days when organizations used to pay hundreds of thousands of dollars in upfront license fees to implement an automation solution with a more modest annual maintenance charge are slowly becoming the past. Sure, ERP providers may still charge based on that model, but many payables automation solution providers have moved away from the on-premise delivery model to the cloud-based Software-as-a-Service model. The change in how solutions are implemented and used has also led to a change in the pricing model.

Cloud-based solutions facilitate a “pay-as-you-go” or “transaction-based” pricing model. This means that instead of making a huge investment upfront, organizations can defer the costs over a longer period of time. Also, they are only paying for the transactions they actually process through the automation solution.

This can be a win-win situation for organizations for a number of reasons.

First, organizations may be in a better position to get budgetary approval for projects where the cost is spread over a longer period of time. Also, it is generally much easier to calculate the cost of ownership and return on investment when you know exactly what you are paying for each transaction and comparing that with what it would cost you to process it in a manual fashion.

Next, this model delivers scalability and additional flexibility to help companies adapt to a changing business environment. For example, an organization may be processing 100,000 invoices one year, but the second year it could have 250,000 invoices because it acquired another business, or it could go down to 50,000 invoices because the organization divested assets or consolidated suppliers. Pay-per-use models allow companies to scale up or down easily without having to go through an expensive upgrade to the application.

Finally, under the transaction-based pricing model, it is in the interest of the solution provider to increase the number of transactions processed through the platform – because this has a direct relation to the fees it earns. So the solution providers have an incentive to drive supplier adoption and electronic invoicing – which means buyer organizations get more data electronically, helping to enable price checking and increase discount capture.

The shift from “on-premise” to “on-demand” is already happening – even in the world of payables automation. Don’t get left behind.

Learn More About Electronic Invoicing Solutions from ADP


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