Did you know that 61% of SaaS companies. Why SaaS Companies have implemented usage-based pricing (UBP)? Also known as consumption-based pricing, pay-as-you-go, time/unit pricing, transaction pricing, pay per use, metered billing, and resource-based pricing, UBP allows customers to pay for products or services based on the resources they consume. It’s the rising star of SaaS pricing, with usage-based pricing examples in every industry. In fact, 80% of customers report better alignment with the value they receive with usage-based billing.
Benefits of Implementing Usage-Based Pricing for SaaS
Real-world usage-based pricing examples prove time and time again how SaaS companies that implement this pricing model outperform their competitors. In fact, research from OpenView accurate cleaned numbers list from frist database Partners found that usage-based SaaS businesses experience continued growth at scale (29.9% vs. 21.7%) and are driven by best-in-class Why SaaS Companies retention (120% vs. 110%). However, rising above the competition requires more than a “me-too” approach.
With so many vendors implementing Usage Based Pricing (UBP), let’s take a look at some of the benefits this pricing strategy provides:
Important Considerations Before Implementing a Usage-Based Pricing Model
Pricing plays a critical role in the financial health of your business. If you get it wrong, you risk leaving money on the table, but if you get it right, your business has the potential to beat revenue mean in a practical sense? projections. If you are considering UBP, here are a few questions to consider carefully:
- Is it easy to track usage metrics for your products and services?
- Is it easy to scale your services?
- Can you provide additional features and functionality to the core offerings?
- How does the price metric correlate with customers’ perception of the value of goods/services?
- Will the complexity or simplicity of the perceived value affect the sales process – speed it up or slow it down, make it easier or more difficult?
Infrastructure Usage Based Pricing Example
Snowflake, Inc., a cloud-based data warehousing and analytics company, offers a solution for storing, managing, and analyzing data. Offering a free trial, pricing is based on two factors — the hong kong data amount of data stored and the amount of computing resources used.
Storage charges are based on the number of bytes stored per month, plus the cost of moving data between clouds. Compute charges are based on the number of credits used to run queries, and depend on the plan purchased – Standard, Enterprise, or Business Critical.