Pricing Strategies
Pay-Per-Use
The B2C pay-per-use model charges consumers based on their actual usage of a service or software. This approach ensures that customers only pay for what they consume, making it attractive for those who prefer not to commit to regular subscription fees.
TYPES OF SOFTWARE
Cloud services like computing power and data storage where usage can vary significantly.
Digital media services such as streaming films or downloading music, where consumers may prefer to pay only for the content they consume.
Utility applications, such as online editing tools or graphic design software, where usage may be intermittent.
BENEFITS
Job Type
CHALLENGES
Unpredictable Revenue: Revenue can fluctuate significantly, making it challenging to predict and manage.
Billing Complexity: Requires sophisticated tracking and billing systems to accurately charge for usage.
Encouragement of Conservation: May inadvertently encourage users to minimize their use of the service to save money, potentially reducing overall revenue.
PSYCHOLOGICAL TACTICS
Transparent Pricing: Clearly communicating how usage is measured and charged can build trust and encourage more usage.
Tiered Usage Rates: Implementing tiered pricing that rewards higher usage with lower rates per unit can encourage more extensive use.
Promotions: Offering temporary promotions or discounts on higher usage thresholds can incentivize increased consumption.
TESTING & FEEDBACK
Real-Time Monitoring: Implement systems to monitor usage patterns in real time to understand customer behavior and adjust offerings accordingly.
User Feedback Collection: Actively collect feedback from users regarding their satisfaction with the pay-per-use system and what might improve their experience.
Pilot Programs: Launch pilot programs with variable pricing to see how users adapt their consumption based on pricing changes.
IMPLEMENTATION
Robust Metering Infrastructure: Ensure the infrastructure for measuring usage is accurate, reliable, and transparent.
Flexible Billing Systems: Develop billing systems that can handle variable charges and provide clear, understandable invoices.
Customer Support: Offer robust customer support to help users understand their usage and charges, addressing any concerns promptly to maintain trust.
BEST FOR
B2C
FLEXIBILITY
High
The pay-per-use model offers high flexibility, adapting easily to changes in user behavior and market conditions. Scalability can vary; while it can handle an increase in users without significant cost changes, revenue may not scale linearly with user growth.
REAL-WORLD EXAMPLE
Adobe Stock, which allows consumers to purchase digital stock photos, videos, and other media assets. Instead of requiring a subscription, users can pay per asset they download, which is ideal for individuals or businesses that need high-quality media but might not have consistent needs to justify a subscription.
View the collection of Pricing Workshops.