Usage-based pricing (UBP) has been a normal approach for SaaS companies with products that adapt according to the needs of the customer. UBP can be a way for SaaS companies to let customers sample the format by beginning at the lowest subscription price. Gaining customer feedback will help these SaaS businesses identify whether or not they should continue with this pricing strategy.
Along with our increasing dependence on automation, increased technology reliance among consumers has prompted similar shifts in pricing models. More recently, New Relic doubled down their push, only paying reps based on the customers’ actual consumption. The decision appears to be paying off for New Relic, who say they have seen a spurt in account growth and data retention since this shift.
Recently, companies like Cypress, Kong, and Autodesk have adopted demand based pricing models. Presumably, these companies are considering the benefits of demand-based pricing that allow them to take advantage of resources when they are needed rather than when they are available.
UBP is becoming increasingly popular in SaaS companies. Nearly 600 participants answered the State of Usage-Based Pricing report; 45% of them had UBP in 201, up from 34% in 202 and 30% in 2020.
Usage-based pricing skyrockets around the world
This year’s rise of UBP is the highest seen in the last 3 years according to a report by Certify.
UBP is on a rising trend and most-likely, it will continue on that trend. As of present moment (2017), 61% of holdouts say they will try or begin testing usage-based pricing soon.
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Subscriptions versus UBP
The data shows that usage-based pricing can co-exist with monthly subscriptions. Users report that those who offer usage-based subscriptions are quite common (23%). Furthermore, 23% of providers offer either subscription tiers or an overall shift to UBP.
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