Now that you’ve determined how you want to architect the usage-based pricing model, it’s important to bring in other parts of your team to get alignment on how to actually roll out your new pricing strategy. Usage-based pricing introduced a whole new set of considerations on other parts of your organization, and the entire cross-functional team needs to have a plan in place before rolling this out to your customer base:
Sales & Customer Success: Sales will need to be enabled on the new pricing model, and be able to articulate it to customers. Additionally, sales compensation structures may need to be updated to align with the usage model. While companies with no usage based pricing are often focused on product add-ons for upsells, companies with usage pricing focus more on overall customer success and encourage natural adoption of more usage.
Product & Engineering: These teams need to determine how usage is monitored, tracked, and kept up to date for both the customer as well as internal finance teams.
Billing Operations: Translating pure usage into how much to bill a customer is a new muscle that the billing operations team will need to develop. Additionally, usage models with an overage require billing operations teams to closely monitor thresholds.
Revenue Accounting: Usage models introduce a whole new set of complexities for revenue recognition, especially with the new ASC 606 / IFRS 15 standards.
So what will success look like? It will be different for every company, of course, but here are a few resources that will provide you with more context. Good luck!
Benchmark: Companies with usage pricing for up to 25% of their revenue see the fastest growth and lowest churn (source: Zuora)