Do we need to set a minimum monthly fee or base charge in a usage-based model to ensure even small customers are profitable (and to avoid lots of tiny accounts paying almost nothing)?

Based on our saas pricing book, Price to Scale, the answer is yes—a base charge or minimum monthly fee can be very useful in a usage-based model. Here’s why:

• It mitigates revenue unpredictability.
As discussed in our book, a pure linear consumption model (where customers “pay only for what they use”) can lead to highly variable revenue. Smaller customers, in particular, might consume little and therefore pay very little, which can hurt profitability.

• It provides stable, predictable revenue.
The book shows that many successful SaaS companies adopt a two-part tariff model that introduces a platform (or base) fee combined with a lower per-unit usage fee. This guarantees a minimum revenue stream even when usage is low—for example, in the case of smaller customers—while still offering volume discounts for larger accounts.

• It creates a more balanced pricing structure.
By incorporating a minimum fee (or using a three-part model with floor and ceiling limits), you avoid the pitfall of having numerous small accounts paying almost nothing. This approach helps align the pricing structure with both customer value and the cost to deliver the service.

In summary, including a minimum base charge ensures that even low-usage customers contribute a predictable revenue floor, which is critical for maintaining profitability and managing account segmentation effectively. This strategy is one of the key recommendations in Price to Scale for addressing the challenges inherent in consumption-based pricing.