[raywu]

> We are focused on subscription sales of our platform. Since announcing PCF in November 2013, our subscription customer count has grown rapidly to 319 as of the end of fiscal 2018. Our subscription revenue was $95.0 million, $150.0 million and $259.0 million for fiscal 2016, fiscal 2017 and fiscal 2018, respectively, representing year-over-year growth of 58% and 73% for our two most recent fiscal years.

[tschellenbach]

How does PCF pricing work and what do those revenue numbers mean in terms of margins?

[sk1ppy]

Their pricing was based on application instances and the list price was ludicrous (several hundred dollars) but most companies got good discounts.

The thing that bothered me with the model was it disincentives modern microservice architectures. One big monolith cost less than lots of smaller components.

It may have changed since I last saw the details.

[zapita]

This is still the case. Even after enterprise discounts, the pricing is outrageously high. I know of at least one well-known enterprise customer where IT has mandated a company-wide "get off Pivotal" policy because TCO is just too damn high.

I hope for Pivotal's sake that the eye-popping price is not crucial to their growth forecast. If it is, I think 2019-20 will be difficult for them. They just don't have the market share to force these prices down customer's throats.

[bigiain]

They tell us there that 319 customers paid $259 million between them in fiscal 2018 - so on average each customer pays $800k/year. They'll have outliers in both directions from that average - But my gut feel is they probably don't have many customers spending less that $80k/year. (Same as I'll bet there's not too many $8mill+/year ones).

[zapita]

Account size and pricing are two different things.

The question is: are the $800k customers getting good value for that subscription, or are they looking at projected costs and thinking "we better switch to a competitor before this gets out of hand".

[bigiain]

The YoY growth rates suggest they're at least capable of convincing new business that it's good value.

(Though in enterprise sales, even amazingly poor vendors often get to re-bill for several years, until the exec who signed off on the subscription moves on and it becomes politically possible for people internally to admit to each other it was a stupid decision to sign up in the first place... So perhaps 2 years growth here is only telling the "sales capability" side of the story, not the "ongoing value provided" side...)