The usage-based pricing model just feels right. Some reports suggest public SaaS companies with usage-based pricing models forecast 38% more revenue growth than their contemporaries. Usage-based pricing models also align the value of the product with your billing interactions and make you more efficient at acquiring new customers by lowering the cost of entry and allowing them to grow over time. These models also prevent customer or ARR churn from dragging you under.
Revenue from licensing fees has been a longstanding business model for enterprises. In recent years, the recurring billing model has helped businesses drive greater revenue compared to the traditional one-time payment model.
Subscription-based businesses are enjoying an unprecedented level of success. They have been successful because they can scale easily in response to changes in demand, and retain customers for long periods of time; thus supporting a relatively predictable stream of revenue. As the amount of customer data continues to increase and subscription services become more complex, accurate and reliable billing becomes increasingly difficult. SaaS businesses still largely rely on outdated billing systems that have been repackaged to fit their needs for the short term which limits their growth potential. These billing systems do not provide the flexibility that modern businesses selling subscription services need and leaves a lot to be desired.
Subscriptions have simplified the customer buying process in recent years, making it easier for companies to generate revenue. However, many companies are opting for usage-based pricing instead of flat-rate pricing lately as it can lead to more attractive, client-oriented services that ultimately drive revenue growth. The rapid growth platform providers want to increase their revenues and are pushing for more complex pricing, bundling, and payment requirements. IoT, Communications, Cloud, and Software platform providers need to handle multiple recurring and one-time payments, made by millions of customers using different devices worldwide. This necessitates the adoption of usage-based billing models.
In today’s ever-changing marketplace, consumers’ demand to maximize the benefit they derive from using a product is driving change in the way companies price and sell their products. The subscription and sharing economy put a greater emphasis on transparency, customized pricing, and real-time tracking. This has quickly seeped into the B2B SaaS industry which is witnessing a pricing disruption like never before. Increasingly customers choose to pay only for what they use as it is affordable and requires a lower initial commitment.
LogiSense provides cloud subscription and usage-based billing solutions for customers all over the world, specializing in upper mid-market and enterprise deployments. LogiSense helps customers complete their quote-to-cash process with flexible, integrated, and automated billing solutions for the Internet of Things, Communications, and Software markets.
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?
Subscription angst, fear, fatigue ... whatever you want to call it, is a real and growing concern. The list of services that can be subscribed to are ever expanding covering a myriad of industries and markets. Enterprise software, apps, gaming, movies, TV, music, lawn care transportation, hygiene, grooming, exercise, nutrition, industrial equipment; are just a few examples of markets that have begun the transition to subscriber centric business models and this list of services continues to expand at a rapid pace. Subscriptions have a growing share of world-wide consumer and corporate budgets, offering benefits to vendors and customers alike, however there are problems emerging. Subscriptions tend to categorize subscribers into large groups, limiting choice by not considering unique subscriber lifestyle and consumption behaviours and needs. Subscription fatigue is a growing response, inviting closer examination of the cost/value benefit from these memberships. The solution? Include a Usage Pricing Strategy in your go to market efforts that substantially thwarts seeds of subscription discontent, drive additional revenue and ultimately improve your customer experience and bottom line