Usage-based Pricing
Playbook
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For sharing their insights
The report also combines data, analysis, and insights from pricing strategies and frameworks of 300+ businesses.
Key Takeaways From The Report
- The integral tenets of usage-based pricing and their business impact
- An efficiency flowchart to evaluate if usage-based pricing is right for your business
- Benchmarks on usage-based pricing adoption in SaaS
- An operational framework for getting started with usage-based pricing
- Teardown of real-life pricing pages and examples in SaaS
A Sneak-peek Into Our Usage-based
Pricing Playbook
Evolving With SaaS Sales From Vendor-led to Buyer-led Models
Changing macro-conditions, highly competitive markets, and democratic access to information are shifting the scales in the SaaS buying process, placing more power in the hands of the customers. It also directly influences the accountability of pricing models to move from the cost of capability ownership to the cost of tangible outcomes.
Shifting to usage-based pricing can help businesses overcome momentum inertia and reduce barriers to entry for customers by
- Limiting expense risks on new SaaS purchases by tying product value directly to business usage value
- Supporting businesses to scale feature usage as and when required - unused products don’t get billed for
- Helping SaaS vendors monetize usage in proportion to their customers' growth
- Limiting churn by decreasing payment load on non-utilization
A Growing Appetite for Usage-based Pricing
Chargebee found that 74% of SaaS companies will likely offer more products on usage-based pricing in 2023 (up from 45% in 2021), as customers are increasingly more mindful of paying for what they use and need the flexibility to dial up or down their usage.
Also, 65% of early-stage businesses between $3-25 million in revenue are more open to adopting the usage-based pricing model, signaling that the pricing paradigm is shifting across segments.
Evaluating if Usage-based Pricing is Right for your Business
Even the most significant of innovations are only helpful with context. While usage-based pricing can significantly reduce barriers to acquisition and make pricing more relevant to customer outcomes, it brings in a new set of caveats
- Limiting expense risks on new SaaS purchases by tying product value directly to business usage value
- Supporting businesses scale feature usage as and when required - unused products don't get billed for
- Helping SaaS vendors monetize usage in proportion to their customers' growth
- Limiting churn by decreasing payment load on non-utilization
Yet, multi-product businesses like Snowflake and Datadog continue to implement usage-based pricing and post better net retention rates on average. With 85% of respondents to our survey indicating that they will continue iterating on usage-based pricing, it is clear that it will find its way into many companies' pricing models
Companies that succeed with UBP share significant commonalities, which, if you don't share, should steer you away from disrupting your existing pricing strategy.
