Article · 16 min read

Value Metrics and Pricing Design for SaaS Companies

Dr. Ajay Sethi · SeedToScale (Accel India) Free Intermediate India

Before you meter anything you have to pick what to meter. Sethi's frequency versus importance grid, worked through with Clevertap, is the clearest method we have seen for finding the unit that grows with the customer's value rather than with your cost.

  • A value metric is the quantitative anchor that best correlates with the outcome customers actually care about.
  • Look for the highest frequency activity tied to an important customer goal, with a consistent usage pattern.
  • Do not price the highest frequency activity high, consider subsidising it, or a competitor undercuts you there.
  • The monetization sweet spot is medium frequency, medium importance activities, and good design shows up as 20 percent plus expansion from existing customers.
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The question it answers

  1. How does usage-based pricing actually work in practice, and should I move to it?

Read with it

  1. Seven hybrid pricing patterns with named companies (GitHub, Shopify, Intercom, Zapier), plus Poyar's point that the enemy is... Growth Unhinged Newsletter · 12 min read The state of usage-based pricing in SaaS Kyle Poyar
  2. The implementation half. Poyar's framing that moving from subscriptions to usage is as big a shift as moving from on-prem to... Growth Unhinged Newsletter · 15 min read Usage-based pricing 2.0 Kyle Poyar
  3. Video · 61 min Usage Based Pricing Playbook for Fast Growth - Patrick Malatack, Kyle Poyar Patrick Malatack
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