Traditional methods of building and delivering products are being disrupted. The once clear lines between open source, commercial off-the-shelf (COTS), and custom software development are blurring. A new model is emerging that allows companies to be more agile and customer-driven in how they build products – the buy-a-feature models.
The buy-a-feature model flips the conventional approach of bundling features into monolithic products or platforms. Instead, it allows customers to purchase individual features from vendors on an a la carte basis. This model has significant implications for product strategy, go-to-market approaches, pricing tactics, and how we think about building software overall.
In this post, we’ll explore the drivers behind the rise of buy-a-feature models, the potential benefits and risks, and some strategies product leaders can employ to capitalize on this trend.
Forces Shaping Buy-a-Feature
A few key factors are converging to make buy-a-feature models increasingly viable and attractive:
Microservices & API-ification of Software
The proliferation of microservices, APIs, and underlying cloud infrastructure has made it much easier to build, deploy, and integrate discrete software components. Rather than monolithic legacy applications, modern software is being decomposed into collections of modular services that can be developed, consumed, and even sold independently.
Low Code/No Code Movements
The rise of low-code/no-code platforms has democratized application development, allowing companies to stitch together custom software experiences by tapping into reusable building blocks and visual tools. Buy-a-feature models pair nicely with this democratization, providing curated features that can easily plug into these low-code environments.
Changing Customer Expectations
Customers today expect fast iteration, continuous value delivery, and the ability to pick and choose exactly what they need. The monolithic, bloated suite approach feels increasingly dated. Buy-a-feature models allow customers to get only what they want and avoid paying for unnecessary capabilities.
Software Eating Services
As Marc Andreessen famously said, software is eating the world. In industry after industry, companies are wrapping services inside software and exposing them via APIs. Buy-a-feature models can help these companies rapidly monetize new innovative services without having to build entire products around them.
Boom in API Economies
The proliferation of public and private API marketplaces has greased the wheels for a thriving API economy to emerge. This has set the stage for buy-a-feature models to easily plug into these growing ecosystems and commerce channels for software components.
Benefits of Buy-a-Feature Models
When executed thoughtfully, buy-a-feature models can unlock significant value for vendors and customers alike:
Benefits for Vendors
- Faster Time to Value – Vendors can quickly monetize innovative services and capabilities by offering them a la carte rather than bundling them into larger product releases.
- Increased Agility – Buying and selling individual features makes it easier for vendors to rapidly experiment, iterate, and evolve their offerings based on market demand.
- Low Commitment Monetization – Buy-a-feature allows vendors to capture revenue from customers who may not be ready to purchase an entire product.
- Expand Addressable Markets – By unbundling, vendors can pursue new verticals, use cases, and buyer personas that may only need a subset of features.
- Greater Customer Intimacy – Vendors gain deeper insights into exactly which capabilities customers value most by analyzing buying patterns.
Benefits for Customers
- Just What They Need – Customers only have to purchase the specific capabilities they require, avoiding shelfware and bloat.
- Faster Value Realization – Customers can rapidly purchase and integrate new features rather than waiting for entire product upgrade cycles.
- Freedom to Mix and Match – Buy-a-feature provides flexibility to combine best-of-breed components into custom software stacks.
- Lower Switching Costs – By unbundling features, customers avoid lock-in and have the optionality to swap vendors over time.
- Only Pay for What They Use – Usage-based pricing models better align cost with realized value versus large upfront license fees.
Risks & Challenges
Of course, buy-a-feature models are not without their risks and challenges that need to be carefully managed:
Risks for Vendors
- Pricing/Packaging Complexity – Determining pricing, bundles, and go-to-market packaging for thousands of individual features is challenging.
- Integration Tax – Providing seamless integration between sets of independently developed features requires major upfront and ongoing investment.
- Undifferentiated Competition – If vendors rely solely on features, they risk being exposed to relentless feature-for-feature cost competition.
- Locking-in to Point Solutions – Buy-a-feature offerings can potentially lock customers into proprietary stacks of fragmented point solutions.
- Protecting Core IP – Vendors have to manage which features they open up vs. keep closed as competitive differentiators.
Risks for Customers
- Complexity & Governance Burden – Purchasing, integrating, and maintaining dozens or hundreds of individual features is extremely complex.
- Accountability Fragmentation – With features sourced from multiple vendors, accountability for performance and support becomes unclear.
- Compliance & Security Exposure – Integrating features from potentially untrusted sources significantly increases compliance and security risks.
- Runaway Consumption Costs – Usage-based pricing models must be carefully governed to avoid costs spiraling out of control.
Strategies for Buy-a-Feature Success
Despite the challenges, buy-a-feature represents a fundamental shift that product leaders would be wise to prepare for. Here are some strategies to consider:
Rethink Product Architectures
Take a “products to platforms” mindset by architecting offerings to be modular collections of composable services, embeddable UX components, extensible APIs, and consumable feature sets. Isolate innovative capabilities into independently deliverable feature services.
Revamp Product Management
Product management processes, organizational structures, and tooling will need to evolve to keep pace with increasing disaggregation and feature velocity. Product Managers may manage collections of features vs. monolithic offerings. New mechanisms are needed to rapidly collect customer insights, prioritize feature backlogs, and coordinate feature delivery at scale.
Reimagine Go-To-Market
Delivering a monolithic product is very different than operating a curated marketplace of purchasable features. New go-to-market muscle is needed around merchandising features, self-serve purchasing flows, cross-sell/upsell tactics, and consumption-based billing/metering.
Focus on the Integration Layer
Competing by making it easiest to stitch together and operate collections of best-of-breed features (your own and third parties) will become a key differentiator. Investment is needed in low code tooling, API gateways, containerization, and frameworks to reduce integration tax.
Invest in Marketplaces
Evaluate emerging B2B feature marketplaces to augment in-house capabilities with third-party features. Establish partnerships and commercial relationships to create tight reciprocal ecosystems. Potentially build your own buy-a-feature marketplace.
Double Down on IP
Even as you open up some features, invest in core defensible intellectual property that will be difficult for competitors to assemble from individual components. Areas like AI/ML algorithms, vertical industry logic, trust, and identity layers can be powerful differentiators.
Develop Feature Mastery
Establish rigorous methodologies for continuously discovering, validating, defining, and prioritizing features. True customer-obsessed mastery over exactly which features provide maximum value will become a competitive advantage as products disaggregate into feature markets.
Closing Thoughts: Buy-a-Feature Models
The rise of buy-a-feature models profoundly challenges how we think about building and commercializing software. While there are certainly risks to navigate, this trend represents a paradigm shift in better-aligning products with how customers want to consume innovation in smaller, more frequent chunks.
Agile companies willing to embrace buy-a-feature models can reap the rewards of faster time-to-value, increased agility, and better customer intimacy. On the other hand, those clinging too tightly to dated monolithic approaches may find themselves disrupted by more nimble players able to rapidly compose differentiated solutions.
Either way, buy-a-feature represents a shift that product leaders cannot ignore. Companies able to get ahead of this trend by reinventing their product architectures, go-to-market strategies, and product management capabilities will be well-positioned to thrive in this brave new world.
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