"Endpoint gating" is a tiered pricing model where a service provider charges for their service(s) on a per endpoint basis. The endpoints may be either per-device or per resource being covered for the period. Below, you will find more details.
Charging Based on Endpoints
- Charging based on endpoints is when a company decides to bill for services or resources provided based on the number of endpoints (or devices) covered for a certain period.
- This model of pricing is often the preferred model for monitoring services where the provider bills per the number of systems or devices being monitored or covered for the period. For instance, a software company providing security monitoring solution or managed IT solutions for various endpoints such as mobile, email, or an intranet may bill for their services based on the number of endpoints being monitored for a client.
- The pricing is often straight forward for both the service provider and the customers as it simply involves multiplying the number endpoints with a unit price.
- This pricing model is also useful where some endpoints are more resource demanding than others and as such the pricing will need to reflect that. For instance, the price to monitor a storage system may be different for the price to monitor a server and the vendor may want that to reflect in the price so may have different prices for each type of endpoint.
SaaS Company Using the Metrics
- There are SaaS providers using this pricing model. Examples of such companies are Pruvan and Amazon (for its IoT management service).
- Although there are SaaS providers using these models, industry experts believe that the model is not ideal for SaaS companies because most of the computing is done in the cloud.
- For example, Vince Tinnirello, CEO of Anchor Network Solutions Inc, stated that they used to charge based on endpoints but had to abandon the model as their clients started using more mobile devices because it made it cost prohibitive for their clients if every mobile device is billed separately.
- In addition, Tinnirello noted that such service providers "rely upon per-device pricing run the risk of losing money as their clients move more and more computing to the cloud."
Pros of Using Endpoint Gating
- Charging based on the number of endpoints is attractive because of its simplicity. It is easy for both client and the provider to calculate cost based on the number of endpoints being serviced.
- It also offers flexibility, allowing the client to scale operations as needed.
- The pricing model also supports standardization, making it easy for the organization to establish "line-card pricing for a given service, with fixed per unit prices for all the device types that can potentially be supported."
- For service providers servicing businesses where the ratio of devices to employees is low, the pricing is likely to be valuable. For instance, if the business being serviced has a ratio of five devices for each employee, it may be an attractive proposition for the service provider.
Cons of Using Endpoint Gating
- The norm in most organization is "to have 10-30 employees for every device" and as such charging based on the number of devices/endpoints may not be an effective pricing strategy for most service providers.
- Endpoint gating is also not a good fit for most SaaS service providers where services are primarily offered within the cloud.
- With the proliferation of different mobile devices in the workplace, and with each employee likely working with multiple devices, businesses can find this pricing model cost prohibitive if they have to pay on a per-device basis.
- A flat fee for each endpoint often lacks the granularity needed to determine the cost of offering a service where multiple services are offered for each endpoint and this may affect profit if not properly calculated.