How to Choose a Low-Code Development Platform That Has Your Best Interests In Mind As low-code platforms continue to reshape the application development landscape, the need for more flexible pricing models is evident.
- Before committing to a low-code platform, carefully evaluate how its pricing model could hamper you once you've achieved scale.
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Low-code platforms are garnering widespread adoption for application development, as highlighted in a 2023 Forrester Wave report. However, these platforms' per-user pricing models have become a non-starter for many startups.
It doesn't have to be that way, though. Some low-code platforms offer flexible pricing models that promote innovation and growth. Entrepreneurs just need to know what to look for. By understanding the approaches available, entrepreneurs can select the proper vendor and model to ensure their vision thrives.
The per-user pricing conundrum
According to OutSystem's most recent State of Application Development report, 70% of IT decision-makers said per-user pricing limits their ability to develop customer-facing applications.
Consider a consumer application developed on a low-code platform with a per-user pricing model of $25/mo. Suppose the application has 10,000 end-users. The monthly cost for maintaining this application would be $250,000, and the annual cost would be $3 million.
As a user base grows, the expenses escalate, making it increasingly difficult for businesses — particularly startups and SMBs with tight budgets — to justify the investment in low-code platforms.
This data point highlights the need for founders to seek out low-code platforms with alternative pricing strategies to ensure the viability of the digital products they want to build (and scale).
While my cost analysis is purely hypothetical, it is an illustrative example of the financial challenge per-user pricing poses. Fortunately, some low-code platforms offer a more equitable pricing structure. Here's how these alternative pricing strategies can benefit entrepreneurs:
This model aligns with the industry trend of charging for the resources a development team utilizes vs. the number of end-users.
- Collaboration & efficiency: When low-code platforms charge for seats instead of users, they encourage collaboration among developers. Team members work together, leveraging their expertise to build applications more efficiently.
- Resource allocation: Paying for a specific number of seats allows startups to assign their development team members to different projects or tasks based on priority and workload.
- Simplified budgeting: Entrepreneurs can easily calculate and plan their expenses with a fixed cost per seat.
Advanced tool capabilities
Tiered pricing based on features and capabilities allows startups to select a pricing plan that suits their needs and budget. This approach provides scalability options and helps leadership optimize resource allocation.
- Customization: Different tiers offer varying levels of advanced features and capabilities, enabling entrepreneurs to choose the package that aligns with their requirements. This customization ensures a business only pays for needed features, avoiding unnecessary expenses and optimizing their investment in a low-code platform.
- Resource optimization: With different tiers offering specific features, businesses can allocate resources and focus on the most relevant tools to their projects. This flexibility ensures that development efforts align with the business's goals and efficiently utilize resources.
- Value for money: Startups can choose a pricing plan that balances cost and functionality. This value-driven approach allows businesses to access advanced features and capabilities that can significantly enhance their development process and the quality of their applications.
A consumption-based pricing model, which charges for data storage, API calls or compute resources, empowers business leaders to control their costs better. By paying just for the resources they consume, startups can align their expenses with actual usage and requirements, promoting cost predictability and efficiency. This model offers a more viable option for developing consumer applications with large user bases.
To enable more large-scale development projects, select low-code platforms have additionally explored offering:
- Volume discounts: These give businesses a discount on their subscription price if they commit to a certain number of seats or a certain usage level, such as the required data storage, number of API calls, or compute resources consumed. A volume discount can benefit entrepreneurs planning to use a low-code development platform for a significant number of projects.
- Pay-as-you-go pricing: This model allows businesses to pay just for the resources they use rather than a fixed monthly subscription. It's ideal for those only working on a limited number of projects
- Freemium plans: Under this approach, businesses can use a low-code development platform for free, with limited features. It permits entrepreneurs to try out a low-code development platform before they commit to a paid plan.
As low-code platforms continue to reshape the application development landscape, the need for more flexible pricing models is evident. So, before committing to a low-code platform, carefully evaluate how its pricing model could hamper you once you've achieved scale.
With the right low-code platform as your partner, you'll be able to align costs with actual usage and requirements, which will help guarantee the success of your startup's digital product over the long term.