SaaS Vendors Make Partners Pay The Freight

Two on-demand software vendors are betting on the outside to sponsor their users.
On-demand collaboration solutions vendor BlueTie came up with a new way to pay the bills.

The company decided to stop charging customers for e-mail and calendar applications. It's not using advertising as a revenue model, either.

Instead, BlueTie is betting that customers will make enough use of the features provided by partners to make the new approach successful.

One such feature, provided in collaboration with travel services vendor Orbitz, lets users type their travel itineraries into their online calendars.

The solution then suggests round-trip flights for the dates and times indicated by the user.

Once the user approves an itinerary, the solution includes the itinerary into a PDF version of an e-ticket.

BlueTie is integrating services like this, which it calls "Featuretisements," from vendors of VoIP, Web conferencing, office supply and flower delivery services, into its e-mail and calendar application.

The company will take a percentage of revenues earned by its partners.

So far, it has named Orbitz and e-mail marketing services vendor Constant Contact as partners, and expects to name more in the coming weeks.

The new pricing model takes effect this week.

"It's a major bet on our part that we can add enough value," BlueTie founder and CEO David Koretz told

A major bet perhaps, but it's not the whole farm.

Koretz said the Rochester, N.Y.-based company has a significant business selling its service through ISPs.

Small- and medium-sized business customers (SMBs) have been paying an average of approximately $5 per user per month for the basic e-mail service, which includes 5 gigabyte e-mail storage, 25 megabyte attachments, custom domain names and virus and spam protection.

While that revenue will go away, the company will continue to charge for certain native premium services, such as 24-hour phone support and a feature allowing users to sync BlueTie with Microsoft Outlook.

The company will also generate rev-share income from other features, such as yellow pages, mapping and dinner reservations that are free to the user.

Koretz said that the blended average revenue per user (ARPU) can easily equal or exceed its current paid ARPU within 12 months.

"We wouldn't have launched it if we didn't have the numbers baked in," he said.

On-demand IT management solutions vendor Klir Technologies is also switching to a sponsored model.

The company provides free, online performance measurement service to enable enterprises to improve the reliability of their datacenter operations.

The service is financed by a growing array of content providers who supply "best practice" information customers can use to implement solutions based on the data generated by Klir's service.

The content publishers share the revenues they earn from online ads with Klir.

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