Viva la Revolution in Pricing!

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Boxed Software is so 20th Century.

Most software you purchase today, you don’t own - you’re subscribing to an online application that you can use as long as you maintain your subscription. Previously, you purchased software for a specific number of people (seats). Then, you’d either purchase future updates, or pay an annual maintenance fee. Plus, you’d have to purchase and manage servers. Yikes.

Enter the Subscription Economy.

It sure didn’t take long for the SaaS (Software as a Service) industry to blossom. Now we can’t live without monthly and annual subscriptions to services like Netflix, Dropbox and SalesForce.

The per-Seat License

Licensing by seats was the standard way to determine software cost, and it made sense, because there wasn’t any other way for the vendor to scale the cost of the software. You have more people using the software? You pay more for it.

The implication was if you had two users, Mike that used the software every day, and Betty that used it once a month, you paid the exact same for both. However, since the software was running on your own servers, you managed the cost of infrastructure to handle the additional users, not the vendor. Meaning that you were cost-sharing with the Vendor.

Licensing in SaaS

With SaaS, you pay a simple subscription fee, and didn’t have to worry about servers or infrastructure. Beautiful.

Except, the licensing model didn’t change, it stayed as per-seat licenses. Whereas previously the vendor couldn’t scale pricing based on what the users actually did. With SaaS they can. But, they didn’t because of the inertia of the per-seat model.

The Active User License

Seats have an obvious scaling problem. If you’re a company with 1,000 employees, where 700 of them need occasional access to the software, you’re not going to want to buy seats for all of them.

In the LMS world, the concept of the Active User sprang up to address this. Instead of seats, you buy the right to have x people access the software within a month.

For companies that have users with variable usage, Active Users are a better license than Seats - but, they have a hidden scaling problem.

The Hidden Cost of Active Users

Imagine you’re with a 1,000 person company, where you buy licenses for half of your users.

There are two major problems:

  1. If you go over your Active-User count for the month, it will cost you 2-3x more per user for “overages”
  2. As a training manager you end up having to play games about when you distribute training. That whole company training? Maybe it needs to wait until next month, so you don’t have to pay overages.

Two Models, Neither Perfect.

That leaves us with two pricing models, neither of them perfect.

Both of them try to quantify the value an organization will get from the software. One by the number of users that could access it, the other by the exact number of users that do access it in a month.

Afghanistan

Albania

Algeria

Andorra

Angola

Antigua and Barbuda

Argentina

Armenia

Aruba

Azerbaijan

Bangladesh

Belarus

Belize

Benin

Bhutan

Bolivia

Bosnia and Herzegovina

Botswana

Brazil

Brunei

Bulgaria

Burkina Faso

Burma

Burundi

Cambodia

Cameroon

Cabo Verde

Central African Republic

Chad

Chile

China

Colombia

Comoros

Congo, Democratic Republic of the

Congo, Republic of the

Costa Rica

Cote d'Ivoire

Croatia

Cuba

Curacao

Cyprus

Czech Republic

Djibouti

Dominica

Dominican Republic

East Timor (see Timor-Leste)

Ecuador

Egypt

El Salvador

Equatorial Guinea

Eritrea

Estonia

Ethiopia

Fiji

Gabon

Gambia, The

Georgia

Ghana

Greece

Grenada

Guatemala

Guinea

Guinea-Bissau

Guyana

Haiti

Honduras

Hong Kong

Hungary

India

Indonesia

Iran

Iraq

Jamaica

Jordan

Kazakhstan

Kenya

Kiribati

Kosovo

Kyrgyzstan

Laos

Latvia

Lebanon

Lesotho

Liberia

Libya

Lithuania

Macau

Macedonia

Madagascar

Malawi

Malaysia

Maldives

Mali

Malta

Marshall Islands

Mauritania

Mauritius

Mexico

Micronesia

Moldova

Mongolia

Montenegro

Morocco

Mozambique

Namibia

Nauru

Nepal

Nicaragua

Niger

Nigeria

North Korea

Oman

PakistanPalau

Palestinian Territories

Panama

Papua New Guinea

Paraguay

Peru

Philippines

Poland

Portugal

Romania

Russia

Rwanda

Saint Kitts and Nevis

Saint Lucia

Saint Vincent and the Grenadines

Samoa

San Marino

Sao Tome and Principe

Senegal

Serbia

Seychelles

Sierra Leone

Sint Maarten

Slovakia

Slovenia

Solomon Islands

Somalia

South Africa

South Sudan

Sri Lanka

Sudan

Suriname

Swaziland

Syria

Taiwan

Tajikistan

Tanzania

Thailand

Timor-Leste

Togo

Tonga

Trinidad and Tobago

Tunisia

Turkey

Turkmenistan

Tuvalu

Uganda

Ukraine

Uruguay

Uzbekistan

Vanuatu

Venezuela

Vietnam

Yemen

Zambia

Zimbabwe

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The Cognitive Science Behind OttoLearn - OttoLearn Adaptive MicrolearningThe Cognitive Science Behind OttoLearn - OttoLearn Microlearning

Hi Josh,

About a week before I began getting my Ottolearn Mastery Moments, I had a popup window from Adobe appear on my screen as I was working on another project, prompting me to update my version of Flash. We do use Flash, so like an idiot, I clicked on the popup and asked it to start the update—and only then noticed that the url was not an adobe address. Of course, I closed the popup window using the X in the upper corner, which didn’t solve anything. Our IT guys did the best they could for me, but my computer is still compromised, and is being replaced.

Fast forward to Ottolearn and your Online Security for Employees course. After completing several mastery moments, I have now learned what to do with popups like that. This morning, as I restarted my computer again, that same Adobe popup appeared and this time I was ready! I opened task manager and killed that little $%^&^ dead in its tracks.

I know the point of letting us try out OttoLearn as participants was for us to experience the power of this platform from the learner’s point of view. I can tell you that I personally am very grateful for the training you provided to me, and the fact that I was able to let others in my company know how to kill off those nasty virus-carrying popups. Yes, it works. Yes, it’s fun! And yes, I have a true feeling of accomplishment.

I can’t wait for the point at which we can talk more about developing courses for our clients.

Thank you!

Option

Pros

Cons

Seats

  • Super easy to understand
  • Very predictable cost, if you have a specific number of users (eg: employees)
  • Doesn’t differentiate between users that have different volumes.
  • Have to purchase seats for your maximum number of users.‍

Active Users
(Typically the number of users that log in during a month)

  • You don’t need a license for every specific user, you can often only license half of your users (since perhaps only half ever log in during a month)
  • Typically there is a large cost for going over your licensed number of users, which can be incredibly expensive (eg: 5-10x more than your licensed cost)
  • You often have to “play games” as an administrator, not wanting to do a mass course enrollment if you have only have your users licensed in a month

Experience

Exp.

High

New accounting rules

Workplace violence & harassment prevention

Low

Framing a basement

Changing a tire

High

Low

Perceived Relevance

For workplace Violence and Harassment Prevention, you have High Experience & Low Relevance.

  • ‍Why? You’ve worked in an office setting for years, so you’ve been through a number of workplace compliance courses.  You have a lot of experience in this area, and you really aren’t excited about it.  
  • What is going to motivate you?  Not much.  It won’t matter if there is a slick expensive video, you’re going to click through the material to get the quiz as quickly as possible, so make the material as short as possible or provide a pre-assessment to skip past the content.

For new Accounting Rules you have High Experience & High Relevance.

  • Why? This is directly related to your job, and builds on your existing knowledge.  You’re going to want to absorb the information efficiently, since you process related information every day.
  • What is going to motivate you?  Efficiently written information.  Just the facts, in as little a time as possible.  Video takes too much time, text is perfect.

For changing  a Tire, you have Low Experience & Low Relevance.  

  • Why? You don’t own a car or drive. You don’t feel that you need to know this, and you also know you can find the information on demand, if and when you actually need it.  
  • What is going to motivate you? Very little, this is the most difficult category. For learners in this category, it’s best to try to engage them through story telling techniques to create a sense of relevance. This could be through text and/or video.

For framing a Basement you have Low Experience & High Relevance.

  • Why?  You don’t know much about it, but you’re highly motivated to learn!  
  • What is going to motivate your? You’ll pretty much consume any form of training, but you’re most likely to seek out rich media experiences, to understand the topic from multiple angles. This is the only category for which video is a perfect fit.

But how do you account for situations where there is unpredictable usage?

OttoLearn has dynamic engagement. Each learner engages on a completely personalized schedule, based on who they are, what they need to know, and how deeply they need to know it.

Otto’s goal is to have learners spend as little time as possible in training while reaching and achieving their mastery goals.

Unlike traditional LMS platforms, OttoLearn is designed to maximize learner efficiency by engaging learners in the minimum amount of training in order to reach and maintain a desired mastery level.

So, what’s a fair subscription model? Seats, Active Users or something else?

We believe the answer lies in adding third type of subscription, that scales based on true usage, not of the number of users.

OttoLearn Gives you a Choice.

With OttoLearn you can get cost certainty with a predictable per-seat subscription, or reduce your costs (or handle a huge number of learners) with a variable usage-based subscription.

For the first time in the online training world, you have the ability to choose a subscription model which will deliver you the best value: a traditional seats-based model which is great when you need a predictable cost, or a usage-based model, which scales according to the value you receive.

No items found.

Option

Pros

Cons

User-based
(Seats)

  • Cost predictability. Each seat costs you $x/month
  • Typically more expensive than a usage-based license

Usage-based

  • Typically less expensive than a seats license
  • Cost variability tempered by pre-purchasing usage credits that never expire and consume them over time

Seats

Pros

  • Super easy to understand
  • Very predictable cost, if you have a specific number of users (eg: employees)

Cons

  • Doesn’t differentiate between users that have different volumes.
  • Have to purchase seats for your maximum number of users.

Active Users
(Typically the number of users that log in during a month)

Pros

  • You don’t need a license for every specific user, you can often only license half of your users (since perhaps only half ever log in during a month)

Cons

  • Typically there is a large cost for going over your licensed number of users, which can be incredibly expensive (eg: 5-10x more than your licensed cost)
  • You often have to “play games” as an administrator, not wanting to do a mass course enrollment if you have only have your users licensed in a month
No items found.

Engagement Factors

Experience

Exp.

High

  • Best possible quadrant for engagement 
  • Will overcome learning obstacles
  • Will find a way to learn, even if materials are poor  
  • Won’t need nudging or incentives
  • Text is great
  • Can easily learn something
  • May need to work up the energy to engage in low quality materials  
  • May procrastinate, so incentives can help motivate.
  • Text is great

Low

  • Wants to learn
  • Has little experience so can benefit from more instructional quality
  • Greatest benefit of video and other rich media
  • Worst possible quadrant  
  • May not have experience in the topic
  • May not really care about it
  • Will require a lot of motivation to see engagement
  • Video can help

High

Low

Perceived Relevance

Adaptive pricing for an adaptive learning platform. Now that feels like the 21st century.

User-based (Seats)

Pros

  • Cost predictability. Each seat costs you $x/month

Cons

  • Typically more expensive than a usage-based license

Usage-based

Pros

  • Typically less expensive than a seats license

Cons

  • Cost variability tempered by pre-purchasing usage credits that never expire and consume them over time
Training Engagement, Retention, and Microlearning - OttoLearn MicrolearningNeovation Learning Solutions Team - OttoLearn Microlearning is a product of Neovation Learning Solutions

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