Once you meet the requirements for implementing a consumption model, there are a range of benefits to this approach that make it an attractive development. Eric outlined three main benefits that are pulling software businesses in this direction:
- Customers Directly See Value - Instead of simply incurring a cost for the right to use software, as in subscription-based billing, customers are billed directly on what they use. This gives a sense of control to the customer as they only pay for the value that they are actively creating in the application.
- Reduces Purchase Timeline - The cost from the outset is only as high as a customer wants to go, with the direct correlation between usage and billing creating a lower bar to entry. However, this can rapidly increase the onboarding timeline as customers feel less stake in beginning to use a company’s software.
- Further Feedback Created For Product Management - The product management team can see directly what customers are spending on and what they’re willing to spend on, helping to outline the most successful or useful parts of a platform.