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Benchmark: Usage-based Pricing

Research by the Subscribed Institute

What is the right mix?

“Align price with use” claim CEOs at every SaaS company, ever.

SaaS and subscription companies have embraced usage-based pricing with open arms. Instead of making customers pay a set price upfront, these companies have flipped that paradigm to help customers only pay for what is used – whether that’s API calls made, miles driven, or invoices sent. Use more, pay more. Use less, pay less. It’s subscription 101 and the SaaS rule of thumb…right?

Not quite.

Subscribed Institute’s Chief Data Scientist Carl Gold compiled data from 900+ companies to investigate the value of usage-based pricing. Through this research, we found that companies that take advantage of usage-based pricing see faster growth. But, there’s a catch — too much usage-based pricing and growth stalls.

At its heart, usage-based pricing is a way of quantifying value. The goal is to let customers pay for the value they need. All usage-based pricing is based on a certain “value metric”– it can be GB of data, miles driven, invoices sent, or any other measurable unit of measure for a service. Simply put, a value metric should align with customer needs, grow with customers, and be predictable ( for the customers and the organization).

Get this landmark report to learn about:

  • The impact of usage-based billing on revenue growth
  • The “sweet spot” revenue mix of usage-based billing
  • 6 successful usage-based pricing strategies

 

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