UNDERSTANDING CONSUMPTION BASED ASPECTS

CORE - LICENSING SYSTEM - INVOICING SYSTEM

Ideally, software vendors should completely decouple their software core, from a licensing and entitlements system, such as SLASCONE, and their invoicing system*. This decoupling allows the maximum degree of flexibility, especially in consumption based scenarios.

*In the context of this article, invoicing system refers to invoicing functionality. This can be provided by either a dedicated invoicing system, or the invoicing module of an ERP or CRM system.

While SLASCONE is not an invoicing system, it is essential in terms of invoicing, since it tracks, collects and ultimately sends all relevant data (the basis for any pricing model) to the invoicing system.

EXAMPLE

Let us use an example to clarify this. A software vendor wants to implement a licensing model based on the number of processed documents. There are many possible variations of such consumption based models:

• Pay as you Go: In such a scenario there is no limit/quota. The number of allowed documents is unlimited.
  • Licensing System: Collects the data and sends it to the invoicing system.
  • Invoicing System: Handles pricing a (i.e., price per document) and creates the invoice according to the consumption data provided by the licensing system.
  • What do you need to do to change the price? Just adjust accordingly in the invoicing system.
• Limited/Quota: In such a scenario the end user is entitled to a (maximum) number of documents.
  
  • Licensing System: Collects the data and makes sure the end user is informed when the limit has been reached. An explicit sales action (upgrade) is required to be able to process more documents.
  • Invoicing System: Pricing is fixed and does not depend on the real usage.
  • What do you need to do to change the number of included documents? Just adjust accordingly in the licensing system.
• Limited/Quota + Pay as you Go : Similar to the previous scenario, there is a limit (included quota), after which it becomes pay as you go.
  
  • Licensing System: Collects the data, either the whole number of processed of documents or the exceeding number, and sends it to the invoicing system.
  • Invoicing System: As explained in the previous scenarios.

It is important to highlight that in any case, there is no direct communication between the software core and the invoicing system. The licensing system is the connecting link, that allows seamless changes.

COMMUNICATION BETWEEN SLASCONE AND INVOICING SYSTEMS

SLASCONE is a modern API-based licensing solution, providing APIs and WebHooks (triggers) for all relevant events, as explained here. Specifically in terms of consumption based scenarios, the relevant data should be sent to the invoicing system according to the respective billing cycle, e.g., monthly or yearly.