SaaS moves to usage-based pricing as enterprises optimize tech spend
Software providers shift to pay-as-you-go billing to bolster revenue growth and give customers more flexibility.
What is usage-based pricing in SaaS?
Usage-based pricing (UBP) is a billing model where customers are charged based on their actual consumption of a software product rather than through a fixed annual subscription fee. This model offers greater flexibility and scalability for customers, allowing them to pay only for what they use, which can be particularly beneficial for companies looking to optimize their tech spending.
Why are SaaS companies shifting to UBP?
SaaS companies are shifting to usage-based pricing to enhance revenue growth and retain enterprise customers. This change is driven by economic pressures, such as inflation and rising interest rates, which have prompted customers to optimize their IT spending. By adopting UBP, vendors can align their pricing with customer usage, making it a more attractive option for businesses that want to avoid paying for unused services.
What are the pros and cons of usage-based pricing?
The advantages of usage-based pricing include increased flexibility and the ability to scale costs according to actual usage, which can help businesses manage their budgets more effectively. However, the model can also introduce complexity and unpredictability in billing, making it harder for customers to forecast their expenses accurately.
SaaS moves to usage-based pricing as enterprises optimize tech spend
published by Route22 Limited
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