The Usage-Based Pricing Reading List

Author: Griffin Parry | Date: Mar 23, 2022 | Article
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Did you know that most of the latest successful software IPOs use a usage-based pricing (UBP) model? UBP has proven to be highly effective for software companies looking to grow faster – but what exactly is it? How can your company implement UBP to increase your revenues? And where is pricing headed in the future?

Below, we’ve taken the time to curate some of the best guides, articles, and resources to answer these questions and start you on your journey to understand, utilise, and grow faster with usage-based pricing.

Introductory guides & explainers to usage-based pricing 

The Usage-Based Pricing Playbook by OpenView Venture Partners

One of the most in-depth resources out there with insights from top SaaS companies who employ usage-based pricing. 

Usage-Based Pricing 2.0 by OpenView Venture Partners

OpenView’s follow-up to their hugely successful playbook (above) covers topics they wish they would have included in the original. 

Launching a Consumption-Based Pricing Model: What, Why, and How? by Zuora

An introduction to consumption-based pricing and how it can be a win-win for company and consumer alike.

Usage-based pricing opportunities

Consumption-based Pricing: Ensuring Every Customer’s Value and Success by Chris Degnan (Chief Revenue Officer at Snowflake)

A view on the benefits of UBP from the customer standpoint, from the team at Snowflake who achieved a successful IPO while using the pricing strategy.

Usage-Based Pricing is the Best Way to Drive Net Revenue Retention (NRR) by Todd Gardner

Founder of SaaS Capital and widely known SaaS expert Todd Gardner gives the data story of how UBP drives NRR, arguably the most important metric in SaaS valuations. 

7 Reasons Usage-Based Pricing is the Future of SaaS by Forma.ai

Forma discusses where the excitement for usage-based pricing is coming from among SaaS companies – and 7 reasons why it’s here to stay. 

The future of software is usage-based pricing by Manav Khurana (Chief Growth Officer at New Relic)

An argument for using consumption pricing, which the author says “fundamentally shifts the relationship between software companies and their customers away from unfair subscription models and towards an inherently equitable exchange of value.”

Usage-Based Pricing: An Evolution For The Taking by Nishant Nair

This article outlines the differences between subscription versus USB Pricing models, explaining the benefits and how you can get started with USB Pricing.

Usage-based pricing success stories

How Usage-Based Pricing Fueled Two 2020 IPOs by James Wood (VP, Pricing Strategy at Insight Partners)

This is the story of JFrog (an Insight Partners portfolio company) and Snowflake used UBP to supercharge their growth and lead them to successful IPOs.

5 SaaS Companies That Have Mastered Usage-Based Billing by Hillary Lovric (Chargify)

The stories of five SaaS companies – Digital Ocean, AWS, Mailgun, MessageBird, and WordStream – who mastered UBP to drastically improve their bottom line.

Usage-Based Pricing: Behind the Scenes of New Relic’s Transformation by Kyle Poyar (OpenView Venture Partners)

New Relic, a cloud observability company, had the worst day in their history on August 7th, 2019. This is the story of how they innovated with usage-based pricing.

Five pros and four cons of usage-based pricing—and why it was a no-brainer for Courier’s CEO by David Wehrs, Chris Parker, and Christine Deakers (Bessemer Venture Partners)

Read about the upsides and downsides of UBP, and how Courier CEO Troy Goode decided to use the pricing model.

Usage-Based Pricing stories of scaling by Kyle Poyar

Download this eBook for insights from SaaS industry leaders who have successfully led the transition to usage-based in their businesses, including Datadog’s former VP of finance, Algolia’s leadership team, Cypress’s VP of customer success and sales.

Implementation challenges of usage-based pricing   

Tackling the Operational Complexities of Usage-Based Pricing by RevOps Co-Op

Two experts in the space – John Griffin and Daniel Wilde – weigh in on UBP complexities, including GTM strategy, pricing design, billing and revenue ops, forecasting, and more.

Consumption Forecasting: What It Is, Why It Matters by Maggie Kullman (Clari)

To build a successful business on a consumption-based model, you have to nail your consumption forecast. But that’s easier said than done.

The GTM and Operational Implications of Usage-Based Pricing by m3ter

John Griffin discusses four operational and GTM areas affected by UBP and explores how data can power your consumption-based pricing strategy.

Tools and how-to guides for usage-based pricing

Your tech stack for usage-based pricing by Marek Rubasinski, VP of Business Development at m3ter

Good news: to deploy usage-based pricing, your existing systems don’t have to change – they just need better access to data. This piece runs through the full tech stack used to support the pricing strategy.

Building a Third-Party SaaS Metering and Billing Integration on AWS by Keith P, Partner Solutions Architect at AWS

In this how-to guide, AWS walks SaaS providers through creating a billing integration experience that captures crucial metering data and publishes it to a third-party billing system.

How Stedi uses m3ter to solve the data problem of metered pricing with Zack Kander, CEO of Stedi

Many companies will relate to the metered billing challenges Stedi was facing before discovering m3ter. This case study covers the three reasons CEO Zack Kanter knew m3ter was the right choice solve their data problem.

4 Key Strategies to Implementing a Usage-Based Pricing Strategy by Rico Mallozzi

Rico Mallozzi outlines in his article the strategies companies can use to implement a successful Usage-Based Pricing Strategy.

Let us know which items on our reading list are the most helpful, or if you’ve got another favourite usage-based pricing resource that we missed. If you have questions, contact us here or reach out on social media.

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