How can we prevent “bill shock” for customers on a usage-based plan so that a sudden spike in usage doesn’t result in an unexpectedly huge bill?

Based on the guidance from our SaaS pricing book, Price to Scale, there are several strategies you can employ to prevent bill shock for customers on usage-based plans:

• Use Predictable Buckets or Tiers
Our book emphasizes that when usage metrics are less predictable, it’s wise to avoid too much granularity. Instead, study your usage data and consider grouping consumption into larger blocks (similar to a t-shirt sizing approach such as M, L, XL). This way, even if there’s a spike in usage, customers are placed into a higher, but predefined, tier rather than facing an unexpected per-unit charge.

• Incorporate a Buffer into Your Pricing Model
One recommendation in Price to Scale is to design your pricing such that there’s a generous buffer built into each tier. This ensures that slight surges in usage don’t automatically push customers into a significantly higher bill amount.

• Model for Predictable Revenue
Part of our methodology is to assess the predictability of your usage metric. By asking, “Can you reliably model price increases over time?” you help ensure that any usage increases are more forecastable, reducing surprises and making it easier both for customers to understand, and for your bookkeeping.

In summary, by grouping usage into predefined, buffered tiers and focusing on predictable pricing metrics, you can effectively mitigate the risk of bill shock. This approach helps maintain a balance between fair usage billing and predictable costs for your customers—a key theme in our Price to Scale strategy.