Top 7 SaaS usage-based pricing examples to emulate in 2024

Curious about how some of SaaS’s most popular and successful companies are implementing a usage-based pricing model that helps their profit margins grow while delivering users a one-of-a-kind customer experience?

In this article, we’ll look at 7 of the industry’s most popular companies to see how SaaS usage-based pricing worked for them and how it can also work for you. 

We’ll go over:

• A quick introduction to usage-based pricing in SaaS
• The difference between usage-based vs. metered billing
• 7 companies who use the model and how you can incorporate it into your pricing
• Deciding whether usage-based pricing would work for your SaaS product or not 

Let’s get started with the first point.

What is usage-based pricing?

Usage-based pricing is a model in which customers pay directly for how much they use a product or service. It's a departure from traditional subscription models, where customers pay a fixed fee regardless of usage.  

In SaaS, usage-based pricing has become very popular. Here’s why:

• Aligns price with value: Customers know exactly what they're paying for because the cost scales with how much they benefit from the software.
• Lowers the entry barrier: New users can get started without a huge upfront investment, encouraging them to try a product out and grow their usage over time.
• Fosters customer loyalty: When pricing is fair and reflects how customers use the product, they're more likely to stick around.

Usage-based vs. metered billing

Metered billing is often confused with usage-based pricing, but there's a key distinction: 

Metered billing takes pre-calculated amounts (e.g., total data stored) and simply multiplies them by a price. 

True usage-based billing goes deeper. It uses raw event data from a company’s software (like logins, transactions, etc.) to calculate charges in real time. 

This gives businesses much more control and transparency over how they bill customers.

Read more: Usage-based vs metered billing - What’s the difference?

Top 7 SaaS usage-based pricing examples

#1 AWS

AWS is basically the “grandfather” of usage-based pricing in the cloud computing world. They offer a massive range of services — everything from computing and storage to databases and analytics. Here's how their pricing model works:

• Pay-as-you-go: You're charged based on the exact resources used. For example, EC2 instances (virtual machines) are billed per second of usage, with prices varying based on instance size, operating system, and region. 
  
  Storage often has per-gigabyte charges for different types (like S3 Standard or EBS block storage). Additionally, moving data between AWS regions or out of AWS usually incurs a fee, often calculated per gigabyte and dependent on the destination.

• On-demand flexibility: You can spin up resources in seconds or scale back down just as quickly. There are no long-term contracts or commitments, making it perfect for scaling businesses and experimentation.
• Options to save: While on-demand is great, AWS also incentivizes cost optimization. Reserved Instances allow you to commit to a certain usage level for 1-3 years in exchange for significant discounts. 

Spot Instances lets you bid on unused capacity at deep discounts, ideal for flexible workloads that can be interrupted.

Why it works for AWS and may also work for you

AWS's adoption of a usage-based pricing model has been instrumental in its success. By removing upfront costs and aligning pricing with actual resource consumption, it has opened the door to businesses that were hesitant to commit to standard cloud contracts. 

This fuels growth, as customers naturally increase spending as they discover the value AWS offers.

Crucially, usage-based pricing tightly couples costs with business outcomes. Companies pay directly for the computing, storage, and services supporting their revenue generation. This alignment creates a clear understanding of ROI and removes the friction often present in rigid subscription models, especially when scaling.

A usage-based model's lack of upfront commitment also unlocks a key benefit: low-risk experimentation. Companies can try new services, features, and configurations without fear of overcommitting financially, leading to innovation and optimization that directly benefit the business's bottom line.

#2 Microsoft Azure

Azure, Microsoft's cloud platform, is another major player in the usage-based pricing game.  They offer similar services to AWS, making them direct competitors. Here's the breakdown of their model:

• Pay per minute: Azure charges for virtual machines (think tiny computers in the cloud) based on the exact minutes they're running. This is great for workloads you only need for specific tasks.
• Predictable savings options: Reserved instances let businesses commit to a certain usage level over time in exchange for discounts.
• Spot instances: These are super-cheap virtual machines for flexible workloads that can be interrupted if someone else needs the capacity. Think of it like bidding on unused computing power.

Why this model works for Azure and may also work for you

Azure's usage-based pricing model offers businesses unparalleled control over their cloud costs. Pay-per-minute billing eliminates the waste associated with over-provisioning resources, ensuring spending tightly aligns with actual usage. This control is vital for optimizing efficiency and managing budgets effectively.

Another key advantage is the flexibility inherent in usage-based pricing. Azure's diverse pricing options — from on-demand to spot instances — allow businesses to tailor their cloud strategy to their specific needs. 

This adaptability ensures cost optimization across various workloads, maximizing the value derived from the platform.

Finally, a usage-based model promotes a cost-conscious mindset within any organization. Since spending is directly tied to consumption, businesses become acutely aware of how resources are used and their associated value. This awareness drives efficiency, eliminates waste, and can lead to strategic optimization with tangible benefits to the bottom line.

#3 Zapier

Zapier’s value prop is about connecting different apps and automating tasks without needing to code. 

They offer a free plan to get you started, but their real power comes with their usage-based approach. They primarily charge based on "tasks " —each step in an automated workflow you create counts as one task.

This pricing model aligns perfectly with the value Zapier provides. The more "Zaps" (their name for automated workflows) a company creates and the more tasks those Zaps run, the more time the company saves.  

This means users are eagerly paying more because they're progressively getting more benefits.

Zapier also has tiered plans, where higher tiers offer more tasks per month (at a lower per-task cost), faster execution of Zaps, and advanced features. This caters to businesses as they grow, encouraging them to upgrade as their automation needs increase.

Why it works for Zapier and may also work for you

By charging per task, they emphasize that every automated action saves their customers real time and effort. This fosters a mindset where increased spending directly corresponds to increased efficiency gains.

Zapier's success also highlights the power of starting small. Their free plan and pay-as-you-go approach remove the barriers to entry, letting users experience the benefits of automation firsthand. 

This low-risk initial engagement builds trust and encourages users to scale their usage naturally as they discover the platform's true potential.

The strategic use of tiers alongside their usage-based core is another strength. By offering more tasks at lower per-task costs as users upgrade, Zapier incentivizes growth. This caters to businesses with expanding automation needs while maintaining the principle of paying only for the value you receive.

#4 Mailchimp

Mailchimp is one of the most popular email marketing platforms out there. They offer a mix of pricing options, including a free plan for smaller businesses and usage-based pricing for those with higher needs. Here's how their usage-based model works:

• Pay-as-you-go credits: Companies can purchase blocks of email credits, with each email sent using up one credit. This is great for businesses with occasional or unpredictable sending volumes.
• Monthly contact-based plans: Mailchimp offers plans for more consistent email marketing based on the number of contacts you have. These plans include a set number of monthly sends.

Why it works for Mailchimp and may also work for you

Mailchimp's success with a hybrid pricing approach highlights the flexibility of usage-based models. By combining pay-as-you-go credits with contact-based plans, they cater to a wide range of customer needs. This adaptability ensures businesses of different sizes and email marketing patterns can find a plan that aligns with their budget and usage.

The ease of entry that usage-based elements provide is another key strength. Free plans and pay-as-you-go options remove the barrier of large upfront commitments. This lowers the risk for potential customers, encouraging them to explore the platform and experience its value firsthand.

Mailchimp's model shows how usage-based pricing naturally scales alongside business growth. As a company's email list expands and its sending volume increases, so do its Mailchimp costs. This links the price paid and the value derived, cultivating a sustainable, long-term relationship between the SaaS and its customers.

#5 Snowflake

Snowflake is a cloud-based data warehousing platform designed for speed and scalability. They are a prime example of how usage-based pricing can be applied to more complex technical products. Here's how they charge:

• Compute usage: Snowflake measures the processing power used to run your data queries and charges based on seconds of usage.
• Storage usage: You pay for the average amount of compressed data you store per month.
• Data transfer: There are charges associated with moving data across cloud regions or out from Snowflake.

Why it works for Snowflake and may also work for you 

Snowflake's usage-based pricing model perfectly aligns cost and workload intensity. Since customers pay only for the compute and storage resources they actively use, they avoid the inefficiency and wasted spending that comes with overprovisioning in traditional models. 

The adaptability of usage-based pricing is another reason it works so well for Snowflake.  Whether a company runs occasional reports or performs continuous, complex analytics, their bill reflects actual usage. This removes the financial risk associated with unpredictable data workloads, providing peace of mind.

Most importantly, Snowflake's model fosters growth without losing money. As a business scales its data storage and analysis needs, its Snowflake costs naturally increase — but this directly reflects the increased value it gets from the platform. This alignment eliminates friction and supports long-term expansion.

#6 Stripe

Stripe is a payment processing platform that makes it easier for businesses to accept payments online. Their pricing model is as simple as it gets: they charge a flat fee per successful transaction.

There's no monthly subscription or setup cost — just a percentage of each payment processed. This aligns perfectly with the value they provide — businesses only pay for what they use.

Why it works for Stripe and may also work for you

Stripe's usage-based model eliminates a major pain point for businesses of all sizes: The complexity and risk of traditional payment processing contracts. By removing upfront costs and long-term commitments, Stripe lowers the barrier to entry, making it especially appealing for startups and smaller businesses that need to start accepting payments quickly.

Another strength is the inherent transparency of a per-transaction pricing model. Companies can accurately forecast their payment processing costs based on their expected volume. This predictability removes a major source of financial uncertainty and simplifies budgeting, especially for businesses with variable revenue streams.

Stripe's frictionless scalability is a testament to the power of usage-based pricing. Whether a company processes a handful of transactions or thousands per day, Stripe's model effortlessly adapts. This removes the need for complex pricing tiers or renegotiating contracts as a business grows, allowing companies to focus on their core operations.

#7 Twilio

Twilio provides cloud-based tools for sending and receiving text messages, making phone calls, and performing other communication functions. It offers a variety of pricing options, giving companies choices over how they pay.

Their core usage-based model charges on a per-use basis — each SMS, voice call, or API request incurs a small fee. Twilio also offers volume discounts for higher-usage customers and the option for committed-use plans if a company has predictable needs.

Why it works for Twilio and may also work for you 

Twilio's usage-based pricing model shows a deep understanding of its primary user base: developers. By charging based on transactions and API calls, Twilio aligns its pricing with the way developers conceptualize and build applications. This intuitive alignment removes friction and fosters a seamless user experience.

Another major factor in Twilio's success is the flexibility of its model, which offers pay-as-you-go alongside volume discounts and committed-use plans. This caters to businesses at different scales and stages of growth. 

Whether it's a small startup experimenting with SMS notifications or a large enterprise rolling out a global call center, Twilio provides a pricing option that fits.

The ability to experiment with new communication features or channels without large upfront investments removes a major barrier for Twilio's customers. This low-risk experimentation can lead to significant breakthroughs and competitive advantages powered by Twilio's platform.

Is usage-based pricing right for your SaaS?

While the examples we've explored show how powerful usage-based pricing can be, it's not a one-size-fits-all solution. Here's how to know if it might make sense for your business:

When it's a good fit

• Your value is easily measured: Can you clearly define usage metrics that show how much a customer benefits from your product (e.g., data stored, emails sent, transactions processed)? If the answer is yes, then consider implementing usage-based pricing.
• Usage scales alongside value: Does increased usage mean a customer is clearly getting more benefits? If so, go with this pricing model.
• The product has variable usage patterns: Some customers might use it a little, others a lot. Usage-based pricing naturally handles this.
• You want to attract a wide range of customers. Lower entry-level costs are attractive to smaller businesses and those who want to try before committing.

When it might not be the best choice

• Value is hard to quantify: If your SaaS's benefit is subjective or difficult to tie to a specific action or usage amount, usage-based pricing could be tricky.
• Predictable revenue is crucial: Usage-based models can lead to some fluctuating income, especially in the early stages.
• Your primary customers are enterprises: Large enterprises often prefer predictable pricing they can easily budget for.
• Operational expenses are a concern: True usage-based billing often requires more sophisticated systems to track and manage than traditional subscriptions.

Remember that hybrid models are an option:

Many successful SaaS companies (like Mailchimp and Twilio) combine usage-based pricing with other models, such as tiers, subscriptions, or volume discounts. This can provide the best of both worlds — aligning cost with value alongside some predictability.

Next steps

Now that you've explored top-tier SaaS usage-based pricing examples and understand the benefits of this model, you're ready to start designing one tailored to your SaaS product. 

Fortunately, you don’t need to go it alone. 

Orb is a done-for-you billing solution specifically designed to tackle the unique challenges of usage-based billing. Our platform is built with this model in mind, offering a suite of tools designed to streamline implementation and ensure long-term success.

‍

Orb's best-in-class billing features can help you confidently launch your usage-based model. Here's how:

• Event-based billing precision: Orb excels at capturing and processing the raw usage events that form the core of your billing calculations, ensuring accurate and transparent charges for customers.
• Flexible pricing configurations: Create and modify complex pricing tiers, volume discounts, and usage-based metrics without headaches. Orb's intuitive tools empower you to experiment with and evolve your pricing strategy easily.
• Advanced usage tracking: Orb transforms even the most intricate usage data into clear, customer-friendly, and highly detailed invoices. This is crucial for SaaS companies whose value proposition depends on granular usage measurement.
• Seamless integrations: Orb integrates with your existing stack, including CRMs, data warehouses (Snowflake, BigQuery, etc.), and accounting systems, minimizing disruption as you roll out your new pricing model.
• Insightful reporting: Orb delivers detailed reports on usage patterns, revenue, and customer behavior. These insights help you make data-driven decisions to optimize your pricing and boost growth.
• Customizable billing logic: Define the exact metrics and calculations that drive your usage-based model. Orb's flexibility ensures your pricing truly reflects the value you provide.
• Hybrid model support: Combine usage-based pricing with subscriptions, tiered pricing, or other models as needed. Orb adapts to your evolving needs, maximizing revenue potential.

Learn more about how Orb can solve your usage-based billing strategy.