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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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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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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 speci...
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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 el...
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When to use usage based pricing
If your costs scale with usage then usage based pricing aligns your costs with your customers' spend. This prevents very large customers from being your worst customers, by generating lots of revenue, but costing you money because the account is gross-margin negative.
If yo...
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