February 2, 2022
As we’ve written about before here, transitioning to a usage-based pricing model is more involved than simply updating some accounting methods and creating a new pricing webpage for your site. Optimizing around usage-based pricing is a company-wide effort that touches all areas of the business. Successful usage-based companies revamp customer-facing functions to align with the business model and find value-add applications for the usage (meter) data like user analytics and roadmap validation. One area that has been without significant innovation or change over the years is the static nature of invoicing and billing. Of all the benefits of usage-based pricing, increasing customer trust through the most fair and transparent pricing methodology possible (pay only for what you use) is one of the most commonly-cited. However, to truly leverage this benefit, you cannot simply bill customers as you have always done with a static invoice at the end of each pay period, given the complex, multi-dimensional nature of usage-based pricing.
To address this innovation gap and to enable our customers to rethink billing through the lens of a usage-based model, we created the Customer Usage and Billing Portal. It provides our clients a fully-modernized, customizable web application for exposing real-time usage and consumption data, and dynamic real-time invoices to their customers.
The Customer Usage and Billing Portal contains several unique views. The Cost and Usage Explorers allow customers to view and explore costs or usage by time, product item, or other custom dimension. Customers can see usage trends in real time and correlate the value of that usage directly to the costs. Many criticisms of usage-based pricing involve the potential for unpredictability that occurs with usage spikes; with the usage-explorer customers can have real-time visibility to system usage, and the ability to view historical data to identify trends and forecast future usage. Customers can define specific thresholds and receive alerts when they are met to stay fully aware of their system usage.
For all the talk about usage-based pricing being the most transparent and fair model for customers, it is essential to provide them some level of visibility into their own usage. The most successful vendors will correlate this usage to value-add actions or activities by the users to drive future sales (i.e. land-and-expand), while the vendors that fail to compellingly demonstrate value will show significant churn, especially as self-service has become a mainstream delivery method for technology. In a legacy billing model, there are value consultants or customer success teams that engage with customers post-deployment to quantify ROI or project outcomes, but there is little ongoing or real-time visibility into system usage or value realization and it fails to capture how the use case evolves over time (after the consultants finish their analysis, they move onto the next customer and may never circle back to reassess the value after user adoption has grown or the use case has evolved).
Since usage-based pricing models are multi-dimensional, providing a traditional invoice that just lists the solution or products used with a corresponding subtotal would be quite opaque. To modernize this, we feel each product item on the invoice should be more detailed, showing the amount of each item that was consumed in the pay period. Further, this data is fully auditable, so anything that appears on the invoice can be verified in the system, either via API extraction or through the Cost and Usage Explorers.
With metered invoices, we enable our clients to provide complete transparency around billing and invoicing to their customers. The accurate, durable, idempotent platform design of our Metering Cloud enables this approach, as the meter data becomes a single source of truth for system usage and consumption. With the Customer Usage and Billing Portal, you are maximizing openness and transparency with your customers, and providing another value-add service by making the meter data available via the portal.
The Customer Usage and Billing Portal is fully customizable with your own corporate branding and style elements. You can define the level of data granularity, the preset dashboards that are presented to customers, and any alerts or notifications to be set. The elements can be embedded in a separate web application or the portal can be hosted with users redirected to it via a hyperlink. As we’ve said, you cannot truly make the shift to a usage-based pricing model without a modern and transparent mode of billing. With the Customer Usage and Billing Portal, we give our customers full control over the billing experience they surface to customers, and are looking to rethink opaque corporate billing practices with a next-generation solution.