What is Per User Per Month?
What is Per User Per Month (PUPM) Pricing?
Per User Per Month (PUPM) is a straightforward pricing model where organisations are billed based on the number of active users accessing a service or software during a given month. The cost is calculated by multiplying the monthly subscription fee per user by the total number of users.
For instance, if a software provider charges £10 per user per month and an organisation has 50 users, the monthly cost would amount to £500.
This model is particularly common in Software as a Service (SaaS) offerings, including productivity tools like Microsoft 365, customer relationship management (CRM) platforms like Salesforce, and communication tools like Slack.
Key Benefits of the PUPM Model
The PUPM pricing structure offers several advantages, making it an attractive choice for both vendors and customers.
- Scalability
Organisations can easily scale up or down based on their needs. If new employees are onboarded, additional user licences can be added, and if staff numbers decrease, licences can be reduced. This flexibility ensures businesses only pay for what they use. - Cost Predictability
With a consistent monthly fee per user, businesses can accurately forecast their IT expenses. This is especially valuable for small to medium-sized enterprises (SMEs) with limited budgets. - Ease of Budgeting
Unlike large upfront costs for perpetual licences, PUPM simplifies budgeting by spreading expenses over time. It allows businesses to manage cash flow effectively without significant upfront investments. - Access to Premium Features
Many vendors offer tiered pricing models within PUPM, allowing organisations to select packages that best suit their requirements. Businesses can opt for basic plans or access premium features based on their budget and needs. - Alignment with Usage
Since the cost is tied to the number of users, businesses only pay for active users. This aligns costs with actual usage, ensuring resources aren’t wasted.
Common Use Cases for PUPM
The PUPM model is particularly suited for organisations leveraging:
- SaaS Applications
Popular SaaS platforms like Microsoft Teams, Dropbox, and Google Workspace use PUPM as it aligns well with the subscription nature of cloud services. - Managed IT Services
Many IT service providers charge clients a monthly fee per user for ongoing IT support, security, or device management. - Communication and Collaboration Tools
Services like Zoom or Slack rely on PUPM pricing to cater to businesses of all sizes, from small startups to large enterprises. - Customer Relationship Management (CRM) Software
Platforms like Salesforce, HubSpot, and Zoho CRM use PUPM to provide flexible subscription options for growing sales teams.
Comparing PUPM to Other Pricing Models
While PUPM is widely adopted, it’s not the only pricing model available. Here’s how it compares to others:
- Flat Fee Pricing
Flat fee pricing involves charging a fixed amount regardless of the number of users. While this can be cost-effective for large teams, it may not suit smaller organisations. - Per Device Pricing
In this model, costs are based on the number of devices accessing the service rather than users. This might work for organisations with a bring-your-own-device (BYOD) policy but could lead to inflated costs if employees use multiple devices. - Pay-As-You-Go (Usage-Based)
Pay-as-you-go models charge based on resource consumption (e.g., storage or bandwidth). While this is ideal for businesses with variable usage, it lacks the predictability of PUPM. - One-Time Licence Fee
Traditional software licensing requires an upfront payment for perpetual use. While this eliminates ongoing costs, it often excludes updates or support, making it less adaptable than PUPM.
Challenges of the PUPM Model
While PUPM offers numerous benefits, it’s not without potential drawbacks:
- Costs Can Escalate: As teams grow, so do subscription costs, which can strain budgets if unchecked.
- Licence Management: Businesses need to manage user licences carefully to avoid paying for inactive accounts.
- Dependency on Vendors: Since PUPM is subscription-based, organisations may face challenges if they wish to switch providers, particularly if they rely heavily on the service.
Why PUPM is Popular in the Digital Age
As businesses increasingly adopt cloud-based solutions, PUPM has emerged as the go-to pricing model. It aligns well with the subscription-based economy, offering flexibility, scalability, and ease of use.
For vendors, PUPM ensures a steady revenue stream, while for customers, it provides cost control and the ability to adapt to changing needs.
Conclusion
The Per User Per Month (PUPM) pricing model has revolutionised how organisations consume IT services and software. By offering flexibility, scalability, and predictable costs, it supports businesses of all sizes in managing their technology needs effectively.
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