The best software companies of the 2020s will be built over the next 12 months. But the way to build and scale a standout company in the 2020s doesn’t look like it did in the past.
Usage-based pricing (UBP) has quickly gone from fringe to mainstream in SaaS. Converts to UBP are drawn to the promise of accelerated revenue growth and a more efficient land-and-expand business model
SaaS companies have been ditching traditional subscription pricing in favor of usage-based models that better align with modern buying behavior and the value delivered by their products.
The merits of launching a free plan should no longer need to be debated. Instead, more companies should be asking: Are we giving enough away?
The shift from pure subscription to usage-based pricing is nearly as complex as going from on-premise to SaaS.
Public SaaS companies that have adopted usage-based pricing are better at landing new customers, growing with them and retaining them.
Out of nine SaaS IPOs in recent years that had the best net dollar retention, seven employ usage-based models.