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Estd 4.22.2023
Based on our saas pricing book Price to Scale, the choice between bulk usage packages and pure pay‐per‐use pricing depends largely on a couple of factors:
• Value Alignment & Measurability:
If the usage of your product is directly measurable and closely tied to the value that customers receive, pure pay‑per‑use pricing can be very effective. This approach ensures that customers are billed in direct proportion to the benefits they gain—and it aligns pricing with cost drivers like storage or compute power, as discussed in our book (see the discussion around usage metrics on page 45).
• Customer Preferences & Predictability:
Bulk usage packages (or tiered/bundled offerings) work well when you’re catering to segments that prefer predictable billing or when usage patterns are less volatile. Such packages can simplify purchasing decisions and are often seen in good‑better‑best models for different market segments. This method not only makes budgeting straightforward for the customer but also helps capture value from various segments, as outlined in our modular pricing discussions (see Chapter 3).
• Hybrid or Dual-Model Considerations:
In practice, many companies find success in offering both. You might offer a baseline pay‑per‑use model that transparently reflects the cost of consumption, while also providing bulk packages or tiers that give a level of certainty and simplicity for certain customer segments.
To summarize, if your cost structure and customer value perception strongly correlate with actual usage, a pure pay‑per‑use approach is ideal. However, if your target customers value predictability and simplicity in billing—or if their consumption patterns vary significantly—it might be advantageous to offer bulk packages or a tiered pricing model. The key is to closely analyze your product’s consumption data and customer behavior so that your pricing model accurately reflects the value delivered while also meeting market needs.