Should we charge based on the number of integrations or API calls customers make?

Based on our saas pricing book, Price to Scale, the key is to choose a metric that best aligns with the customer's perceived value and your product’s core usage patterns. Rather than picking one option arbitrarily (integrations versus API calls), consider the following:

• Value Alignment: Ask which activity (more integrations or more API calls) better represents the value your customer derives. If an integration is a milestone that dramatically increases customer capabilities, then charging per integration might make sense. However, if the majority of value comes from frequent API interactions, pricing per API call could be more appropriate.

• Customer Familiarity: As discussed in Price to Scale, understanding what customers are accustomed to is crucial. If your customers are used to a certain pricing model (for example, cost per integration due to the setup effort involved) versus a consumption-based model, that can heavily influence the decision.

• Usage Versus Subscription: The book outlines a broader framework where you decide between a usage-based model (pricing on actual consumption) or a subscription-based model (flat rate, perhaps per agent). Each has its tradeoffs in terms of revenue upside and simplicity.

In summary, our book recommends evaluating which metric – integrations or API calls – most closely ties to the value delivered to customers. By analyzing customer behavior and expectations, you can select the pricing unit (or even a hybrid approach) that better reflects both the customer’s and your business’s success.

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