Pricing Model of Incapsula

Incapsula, the pure-play cloud security company now in the CDN business, is very intriguing. I’m sure many are wondering where they fit in the CDN ecosystem, including myself. The Incapsula website, and press releases provide a great deal of intelligence; enough to make some educated guesses.

The most striking part of their website is the published pricing. Incapsula publishes pricing publicly, just like, CloudFlare, Amazon, and Godaddy. On the opposite end, Akamai, Limelight, Highwinds & EdgeCast, don’t publish pricing. Why publish pricing on the website? The reason is simple, CDNs publish pricing to go after SMB market, in order to close as many accounts as possible, just like CloudFlare and Amazon. I believe that a company going after enterprise market, that has a dedicated sales force, should never publish pricing. By publishing pricing, you take away all the leverage that sales reps have during negotiations. Next, publishing prices for cloud compute and cloud storage is understandable. Publishing pricing for CDN, if your CloudFlare going after the SMB market, is okay for some. But publishing pricing for the most robust security suite in all of the CDN ecosystem, doesn’t make sense to me. In my honest opinion, Incapsula is selling itself short, by offering this security suite for only a few hundred dollars per month. This product is worth ten times that amount per month. It might be too much for some of the SMBs, but it’s right on the money for the mid-market and enterprise market.

What is the right pricing model for Incapsula, or any other pure-play security company wanting to get into the CDN business? Here is a rule of thumb; It’s better attracting fewer higher paying customers, than lots of low paying customers. It’s better to have 100 customers paying $100 million per year, than 1,000 customers paying $100 million per year. Akamai’s 1,000 customers pay $1.5 billion per year vs CloudFlares 1.5 million customers paying $100 million per year. Akamai has the perfect pricing model. That is the pricing model that is to be followed. Not only is it great from a sales perspective, but its a whole lot cheaper supporting fewer customers.