Pundits all over the globe are warning of an economic slowdown. As a result, consumers are anxious and rethinking their budgets, looking for ways to cut spend. The choice many face is: can I live without this service in order to save money?
There’s a better way!
By offering on-demand pricing models that offer a continuance of access but at a cost tied to consumption, you can deliver value and retain your revenue streams in the event of a recession.
Usage based pricing, by its nature, is inherently flexible. Aligning pricing with usage can retain demand by reducing the up-front or fixed costs associated with physical assets or basic subscriptions that have large gaps in addressing customer demand i.e. potentially lower use customers. In addition, it enables the expansion of markets for customers who can afford to use the product or service.
The Media and Entertainment industry is a good example of where people could potentially cancel their subscription services due to a recession. Metered usage billing based on what customers are watching is a great way for media companies to retain customers who would otherwise cancel to higher all you can eat subscription fees.
Give consumers what they demand, which is control of their recurring billing via a mix of subscriptions and consumption models similar to the mobile billing model. These models can help companies gain more customers and increase revenues. Metered usage is also a good way of improving free trial conversions, reducing churn and giving customers the differentiation they crave.
Threats of a recession force consumers to rethink their budget flexibility, cash flow, affordability, or cost of ownership. With the advent of low cost sensors, shared cloud resources, high speed access and usage based billing, it makes it possible to efficiently charge for smaller increments of a service while maintaining consistent access.
Customers are continually searching for affordable flexibility based on uncertain future considerations around growth, volatility, unpredictability or recessionary concerns. Customers can pay for services when they need them and can dynamically scale their usage up or down, giving them a level of comfort and an approach to adapt to changing conditions.
Not only is this a benefit to the customer but also the service provider now has richer insight to consumption trends that can feed into product management cycles in order to offer even more valuable services and increase long-term customer retention.
Flavio Gomes /
Flavio is leading a team of highly skilled and passionate professionals to deliver on a vision he sees of enabling digital transformation towards the Usage Economy – the dynamic convergence of subscription- and usage-based billing models, allowing digital businesses to monetize in real-time any triggered event to drive revenue, gain intelligence and lever significant competitive advantage.