What is the Usage Economy? Let us explain - LogiSense
WHY IT MATTERS?
The usage economy is a pay-for-use-based business environment that strives to offer an optimized exchange of value between businesses and their customers.By utilizing usage-based pricing and service delivery, businesses can offer the right price point without leaving money on the table for customers that are seeking to pay for what they use.
Customers are demanding more pricing transparency and elasticity. They want the ability to track the use of services in real-time and they want a value proposition that is tied to the amount they use and pay for.
On the other side of the equation, Vendors want to empower their sales and market teams by replacing inflexible, non-recurring financial systems that can’t handle usage-based billing models. It’s an environment where businesses and their partners have the freedom and flexibility to attract new customers, balance investment spending to resource consumption and ultimately drive higher revenues at a faster pace.
IT STARTS WITH THE SUBSCRIPTION
The transition from one-time pricing plans to subscription models enables businesses to engage with a deeper, more meaningful long-term relationship with their customers.And because subscriptions are generally associated with service level agreements and feature updates that are delivered in real-time, they provide subscribers with an easy and cost-effective way of staying current.
The subscriber isn’t the only one that benefits; businesses are assured visibility into future cash flows and revenue streams and have added insight into what their inventory levels need to look like.These benefits have been known for some time but a subscription model is not enough.
Often times there are gaps in the perceived value from one subscription tier to the next. Flat rate, simplified pricing may satisfy a portion of the potential heavy user base while alienating others who recognize they won’t be consuming at the same rate or volume thus commoditizing a flat rate model.
By offering a usage driven pricing plan in conjunction with a base subscription model, end users can enjoy the benefits of increased value without the need to worry about what tier is best for them or where their usage may trend in the future…and they find comfort in knowing they are only paying for what they are using.
As a result, businesses that adopt a Usage-based billing model experience...
Increase market share and revenue as a result of capturing market segments that may not fit in a simplified subscription model
Personalize and granular pricing models that fit unique business requirements
Reduce churn as they provide their users with tools to monitor their consumption and spend in real-time improving the subscriber experience
Tie revenue to scarcity of resources with pricing elasticity
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.