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Usage-Based Pricing
Usage-based pricing is a go-to-market model where the customer pays based on how much they use your product or service.
It goes by many names: consumption-based pricing, pay-per-use pricing, and pay-as-you-go pricing.
The simplest examples of these are utility bills like water and electricity.
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The 3 levels of Deploying Usage-Based Pricing
Level 1: Pay As You Grow
This model increased product adoption by allowing first-time customers to try their service with no commitment for the first 3 months.
Level 2: Pay For Actual Consumption
This model allows companies to keep their services simple, cost-effective, and price-eficient, without missing out on the complexity needed to cover their own operating costs.
Level 3: Hourly Measurements / Hybrid Monthly-Hourly
This pricing model is the epitome of true value-based pricing because their customers are only paying for exactly what they use.
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Preparing for the Next Evolution in Pricing & Billing
For SaaS companies that have implemented usage-based pricing, the journey toward effective implementation of Events-Based Billing is halfway complete.
You have effective tools and processes for gathering the necessary data that is necessary to measure and price your offering based on specific-usage. You just need a way to bill on it.
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Events-Based Billing: Leveraging Actions to Provide Value-Based Billing
The ability to bill customers based on how they consume your product is a powerful and non-arbitrary pricing methodology which effectively increases usage and revenue.
By leveraging user actions to provide value-based billing, both you and your customers end up winning.
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