Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models –

▤ Summary

The days of executives choosing software for their employees based on IT compatibility or KPIs are gone. This is why we’re seeing more and more SaaS companies — Datadog, Twilio, AWS, Snowflake and Stripe, to name a few — find success with a usage-based pricing model. Not limiting the number of users who can access the software, customers are able to find new use cases — which leads to more long-term success and higher lifetime value. While we aren’t going 100% usage-based overnight, looking at some of the megatrends in software — automation, AI and APIs — the value of a product normally doesn’t scale with more logins. Some fear that investors will hate usage-based pricing because customers aren’t locked into a subscription.

▦ Linked Companies