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Revenue model

The YubiKeys have historically been sold on a perpetual basis, but over the last two years Yubico has been expanding its business through a subscription-based model. There are several reasons for launching the subscription offering, including new ways for Yubico to deepen customer relationships and extend revenue over time, but also to offer an alternative that can reduce the customer’s buying barriers and create incentives to choose to secure a larger share of employees already in the initial deal.

The perpetual revenue model

The perpetual revenue model is based on a customer making a one-time purchase of a YubiKey with an upfront payment, which gives the customer sole ownership of the hardware. The main hardware product families vary in price between $25 and $90 depending on security classification and features. Key benefits for the customer related to the perpetual model include that it is a one-time capex investment and low commitment which makes it an attractive alternative, especially for customers who want to try the YubiKeys at a smaller scale first. This is a purchase model commonly used and preferred by larger technology companies. For Yubico, this implies a fast transaction while receiving an upfront payment, no long-term customer commitments, and an important initial sales step allowing testing before larger deployments.

The subscription-based model 

The subscription-based model allows for continuous customer touchpoints throughout the customer journey, increasing customer retention and loyalty. It results in predictable revenues phased over the contract length and allows Yubico to grow revenue in the immediate customer organization as well as to the customer’s third-party partners and, ultimately, their customer base if applicable. This expands Yubico’s addressable market in existing accounts, offering a faster path to growth compared to signing new customers. Thus, Yubico aims to increase sales of the subscription-based model going forward, while still keeping the perpetual alternative.

The subscription model is offered through all sales channels, except e-commerce, and is currently available for deals larger than 500 users. The direct sales team as well as the indirect sales channel of selected distributors work actively on optimizing customer engagement and sales based on account size, geography, and industry.