Under usage-based pricing the bill follows consumption. It lowers the barrier to start, since customers pay little at first, and ties revenue to the value delivered. The trade-off is less predictable revenue for the vendor and bills for the customer.
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Common models
- Pay per unit, such as per message or per API call
- Tiered usage bands with included allowances
- Base subscription plus overage
- Credits purchased in advance
What to watch
Make the metric something customers understand and can predict, and show current usage in the product so bills hold no surprises.
Common mistakes
Choosing a metric customers can't control
If people can't predict the bill they hesitate to use the product.
Frequently Asked Questions
Pricing pages need to explain the model clearly, since pricing searches are common and buyers compare.
Keep reading
- Seat-based pricing: Seat-based pricing charges per user, so revenue grows as more people in a customer's team use the product.
- Pricing Page: A pricing page lists a product's plans and prices, helping buyers pick the right option. It is often one of a SaaS site's most visited commercial pages.
- Expansion Revenue: Additional recurring revenue from existing customers through upgrades, extra seats, add-ons or higher usage. The main driver of net revenue retention.
- Monthly Recurring Revenue: The predictable subscription revenue a SaaS company earns each month, normalized across plans. The main operating metric for self-serve and monthly businesses.
- Account-Based Marketing: A B2B strategy that targets a defined list of high-value companies with coordinated, personalized marketing and sales, rather than casting a wide net.
- Activation Rate: The share of new sign-ups who reach a defined first moment of value in a product. The bridge between acquiring users and turning them into customers.
- Alternatives Page: A page that answers “[competitor] alternatives” by listing several real options, written for buyers who are leaving or ruling out a product.
- Buying Committee: The group of people inside a company who influence, evaluate and approve a B2B software purchase, from end users to finance, IT and legal.
