What usage metrics do other SaaS companies in our domain charge on, and are customers in this market comfortable with that model (or will we need to educate them if we choose a novel metric)?

Based on our saas pricing book, Price to Scale, many SaaS companies have traditionally relied on simpler models—such as seat-based or named-user pricing—to align with customer expectations. However, there has been a shift toward usage or consumption-based metrics that more directly tie costs to actual product usage. Here are a few points from our book that address your question:

• Usage Metrics in the Market:
– Many companies are exploring metrics such as interactions, data volume, or specific actions within the platform as alternative ways to price their offerings.
– The emphasis is on tracking and reporting transparently, ensuring customers can clearly see how usage—and therefore costs—is measured.

• Customer Comfort and the Need for Education:
– One of the key insights discussed is that the most important factor is understanding what customers are accustomed to. If your customers have historically dealt with per-seat or named-user models, they might be less comfortable with a completely new usage-based approach.
– If you choose to measure usage in a novel way, our book suggests that you may indeed need to educate your customers. This involves clarifying how the metric directly ties to the value they derive from your product.

• Practical Framework for Deciding on Metrics:
– We recommend generating a list of potential usage metrics and evaluating them using key criteria. For example, does your metric reflect client value proportionally?
– This framework helps ensure that whichever metric you choose, it both resonates with customer expectations and supports your pricing strategy.

In summary, while many SaaS companies in your domain have gravitated toward models that align with traditional metrics, shifting to a consumption-based pricing model may require a thoughtful approach and clear communication. Ensuring transparency and a direct link to client value will be critical, and if your chosen metric is novel, be prepared to invest in educating your customers.