Amberflo co-founder and CEO Puneet Gupta was featured on TechCrunch this week for his article, How your company can adopt a usage-based business model like AWS. The article details his experience as a GM at AWS operating and scaling cloud businesses with a usage-based pricing model. As we have written in the past, usage-based pricing is not a one-time project, but instead it constantly changes as the business grows and customer usage patterns evolve. With this in mind, the fact that AWS has released over 300 cloud services and never had to recall a single service due to incorrect pricing becomes even more impressive.
Some key themes covered in the article include:
- Seek out a purpose-built metering service to implement usage metering. To meter your technology stack exhaustively, the service must be built for scale and availability.
- Reduce the number of data hops when collecting meter data. Meter (usage) data cannot be dropped or incorrect; accuracy and completeness are essential. A best practice to guarantee accuracy is to deploy the metering system at the source (where usage events originate) and stream events directly to the meter data storage system.
- Deploy metering at the outset of all development; it enables complete visibility to usage and resource consumption and provides audit trail when customer has questions about bill or usage.
- Build usage models (customer usage profiles) and cost profiles (mapping usage to backend resource consumption) to understand margins and build pricing plans.
- Build and test multiple pricing models using Price Modeling on historical usage data or with beta tests on small segments of live customers.
- Constantly tweak and reassess pricing models to ensure they remain optimized as usage and costs evolve over time.
Read the full article on TechCrunch here.