When determining the actual usage of your product, there are four distinct streams that emerge. Each of these fits into a different consumption model, with the knowledge of usage for each case defining the best monetization structure to opt for.
Typically, there are four points that a business can use to determine the usage and billing of their product:
- Discrete Point of Value - Once a particular action is completed, the client will incur a charge. A great example of this is a financial company that charges a fee for every check deposited. The check is either deposited or it is not, with the fulfillment of this condition being small and repeatable, making it a prime candidate for point of value consumption.
- Physical Resource Consumption - As with the earlier medical example, the consumption of a physical resource is perhaps the most straightforward or direct form of consumption billing.
- Time-Block Charging - Charging across blocks of time is appropriate when value is derived from a product over a more extended period of time. This model is commonly used by cloud service providers, where their inherent value is created by extended use
- Logical Resource Consumption - The closest consumption scheme to traditional licensing is where you have a non-reusable logical consumption. An example of this is moving data from point a to point b, creating value upon completion.