The Rise of Usage Based Billing for SaaS

It looks like we are witnessing a new phase of the usage-based billing evolution. Legacy billing software is no longer able to accommodate all the functions its users (and their customers) need. As a result, subscription billing software has to evolve into something more sophisticated. Traditional recurring payment processing and invoice software are supposed to bill the buyers of a subscription-based service or product at regular time intervals. However, consumers, hit by unexpected lockdowns and recession, started counting their money more carefully. Now they want to pay only for what they are really consuming.

So, billing models based on ordinary recurring payments no longer work so well as before. At the same time, the progress of the internet of things has induced the need for more complex payment functionality. IoT platform providers need to handle multiple recurring and one-time payments, made by millions of customers using different devices worldwide, around the clock. In some cases, implementation of a usage-based billing model seems to be the correct response to these challenges.

Why is this Billing Model so Popular?

The cloud usage-based billing model is a symbiotic arrangement, beneficial for both business and their customers. Usage or cloud usage based billing technique is largely based on the “smart metering” approach applied by utility companies. Or on “pay-as-you-go” subscription management tactics.

If a company acts smart, it can increase its revenues, even under “bearish” economic realities. It turns out that what customers need most is not some product or service, but flexibility. Freedom of choice: “to buy or not to buy”, as