Best Practices for Consumption-based Pricing

The post-subscription era is in full swing, and SaaS companies have evolved from traditional subscription pricing to consumption-based or usage-based pricing models that better align with modern buying behavior and the value delivered by their products.

While the consumption-based pricing model has gone mainstream, many companies are still in the early stages of evaluation. Whether you’re evaluating or testing, our primer can help determine if this approach is right for your business, highlighting the benefits and challenges it brings to the table.

Consumption-based pricing is a pricing model where customers are charged according to the resources they consume.

Simply put, customers will be paying for what they have used or consumed only—nothing less, nothing more. So the more they use, the more they pay and vice versa. The metrics that are used to track the usage often depend on the value that the product brings to the customer. Now that you’re clear about what usage-based pricing is, let’s look closely at some of the evolution of SaaS pricing models.