![]() To that end, M3ter is going to be using some of the funding to continue building out more sophisticated tools of its own. Parry admits that there remains a significant cultural shift among SaaS businesses, especially those that might have already built their businesses around time-based models - growing pains that are probably not that much different than those that software companies faced when they moved from selling off-the-shelf software to products sold on subscriptions.īut on the other hand, introducing usage-based billing also means opening the door to getting more granular data on what customers are using, and how they are using it, which in turn can inform not just what you are offering them, but what the SaaS provider is building and investing in a business. In the past, he continued, it was about predictability and knowing every month that you were paying a certain amount for a service, “but things have swung in the other direction.” “As a customer, you don’t want to leave money on the table, and you also want to focus on growing more efficiently.” Efficiently in this sense means, essentially, by spending as little money as possible to get there. “Software companies are looking at pricing as a strategic lever these days,” Parry said. SF-based Metronome, backed by some heavy hitters out of the Bay Area, and more legacy companies like LogiSense are among those also building out usage-based pricing platforms.) (Unsurprisingly, M3ter is not the only company looking to capitalize on that. The prediction for 2023 had been 55%, but as Parry pointed out to me, that figure has been revised up to 61%, alongside another 10-15% growth if you add in those businesses that have said that they are considering it. Research from OpenView found that 45% of SaaS vendors in 2022 were adopting usage-based pricing compared to 33% the year before that. At its core, that is something that has proven to be more popular especially in current, leaner times, when businesses are more cautious than ever around how they spend money, possibly at the expense of being less focused on simply budgeting based on predictable outgoings.Īnd while it is certainly not ubiquitous among all SaaS businesses, it has definitely grown in popularity. One of the unique aspects of usage-based pricing is the granularity it gives customers: They are paying just for what they are using. ![]() That startup was eventually acquired by Amazon’s AWS - arguably the grand-daddy of popularizing usage-based pricing for APIs by way of its cloud services platform. Its customers and partners these days are typically technology businesses built around API calls, a natural fit for usage-based pricing models they include partner payments business Paddle, as well as customers like ID verification company Onfido and fraud prevention startup Sift.Īnd indeed, the very concept of starting a business to help other tech companies adopt and adapt to usage-based pricing comes from the founders’ own experiences: Parry and co-founder John Griffin previously founded GameSparks, a games development engine build on usage-based pricing. M3ter came out of stealth a little over a year ago - a debut that coincided with the announcing of that seed round - and in that time it has grown its business 375%. The company is not disclosing its valuation but CEO and co-founder Griffin Parry tells me it now estimates it has some 3-4 years of runway. Notion Capital is leading this round, with Insight Partners, Union Square Ventures and Kindred Capital - all previous backers from its $17.5 million seed round last year - also in the round. The company has raised $14 million - a Series A that it will be using to double down on new markets like the U.S., and to build more technology for its users. Today, a startup out of London called M3ter that is building tools to take the next step in that evolution - more granular usage-based pricing - is announcing funding on the back of strong demand. ![]() The concept of SaaS as a business model changed the game in tech by moving users away from buying software outright and toward paying for service availability based on time-based subscriptions, typically with per-month or annual pricing.
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