6 Questions To Ask Before Adopting Usage-Based Pricing

Companies with usage-based pricing. Source: Kyle Poyar at TechCrunch
  • An important part of usage-based pricing is the pricing axis. A good axis will have the following properties:
  • ____ Customers should experience more value if their usage increases.
  • ____ If customers throttle usage, they should experience a decrease in value.
  • ____ If customers throttle usage, it should not go against the growth strategy of the company.
  • ____ Customers should be able to predict their future usage.
  • ____ The axis should be of sufficiently large scale, preferably tens of thousands of units.
  • Has your buyer bought usage-based software in the past?

Question #1: Does value increase with usage?

Question #2: If the customer throttles usage, is the value reduced?

Question #3: If the customer throttles usage, is that ok for your strategy?

Question #4: Is usage predictable for the customer?

Question #5: Is the pricing axis large-scale?

Question #6: Is your buyer used to buying by usage?





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