For a product that is essentially an API/developer tool, does usage-based pricing (pay per use) generally work better than seat-based licensing? What have others experienced for developer-focused SaaS?

Based on our saas pricing book, Price to Scale, usage-based pricing generally fits better for API and developer-focused products. Here’s why:

• Direct correlation to consumption: For API-driven products, pricing based on usage (such as per API call or per transaction) aligns with how customers use the service. This approach reduces upfront costs and incentivizes adoption because customers pay in proportion to the value they receive.

• Transparent measurement: Our book emphasizes the importance of clear tracking and reporting. With usage-based pricing, it’s easier to transparently measure actual consumption, which can build trust with a technically savvy developer audience.

• Flexibility and scaling: While traditional seat-based pricing is effective for products that serve as core systems-of-record (like CRMs or HR platforms), APIs are more transactional in nature. Therefore, a consumption model not only reflects the cost-to-serve but also supports businesses in scaling with their users’ needs.

• Industry experiences: Many developer-focused SaaS providers have found that a usage model lowers the barrier to entry. Early-stage companies benefit from this model by reducing the risk of paying for more than what is used, later transitioning to pricing models that fit more mature customers if needed.

To summarize, for a product that is an API or developer tool, usage-based pricing tends to be a better fit—as it aligns price with consumption, supports transparency, and has been successfully adopted by many of our peers in the SaaS market, as we discuss in Price to Scale.