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I think this is going to be/already is a crowded space. SaaS companies are feeling the burn of layoffs due to per-seat pricing, so metered billing seems like a

I think this is going to be/already is a crowded space. SaaS companies are feeling the burn of layoffs due to per-seat pricing, so metered billing seems like a good alternative. Unfortunately, as a SaaS consumer, I despise it, as it's meant to be obtuse and hard to estimate, plus I have yet to see any SaaS/IaaS offer real spend controls like stopping the service.

Rafsark 4y ago
In my opinion, the future of billing lies in a hybrid approach. Former subscription- or per-seat-based models were too restrictive. Subscriptions with capped features prevented users from upselling and generating more revenue. The gap between the base subscription and upsell was often too large. I agree that usage-based billing can be difficult to predict revenue from. We don't think companies will switch entirely to this model. However, the hybrid model can be beneficial for both customers and vendors. Companies can charge a base platform fee and then charge for overage instead of blocking it. This could increase revenue for companies that currently use subscription-based billing.
jrockway 4y ago
I'm a big fan of usage based billing. It lets small users have small bills. Per-seat pricing has always felt annoying to me. Ideally you want everyone at your company to be able to access the tools that everyone else uses (you don't want to create a bunch of second class citizens), but that gets really expensive really quickly. So per-user-per-month has never felt great to me. That said, usage-based billing is confusing. And when customers are confused, they simply chargeback the credit card charge. AWS can make it work, but I'm not sure if everyone else can. Will be interesting to see.
- swyx 4y ago
  > And when customers are confused, they simply chargeback the credit card charge. this is not good faith B2B behavior. i'd be surprised if 1% of B2B usage based billing customers behave like this.
  - AnhTho_FR 4y ago
    I think B2B users would rather dispute the invoice with their account manager and might get a discount.
  - jrockway 4y ago
    I agree that it's not good faith, but speaking from the position of someone who has offered self-service signup... that's what customers did. They'd create an account, start using the service, ignore emails from their account manager, and then dispute the bill when we charged their card. This is rare, of course, but it is something you have to expect when you give someone free reign to spend money and then bill them at the end of the month. It's something you have to expect, and kind of gauge how much money the customer has and send them lots of email as they approach a limit, and make it very clear in the UI that money is being spent that they will soon have to pay. Even then, who knows what people will do. It's bad faith on their part; you, the service provider, are the ones penalized.
- kdeldycke 4y ago
  Small bills are cool, until it's too small. I remember having to negotiate with Stripe the removal of their lowest limits. The quantum of unit I was billing on my cloud platform was such that you could consume just enough CPU and storage to end up with a $0.01 invoice at the end of the month. It was impossible for Stripe to process this payment. IIRC their lowest limit was $0.50 or $0.10. I guess they had this limit in place to prevent abuse and limit fraud. As we had similar hard-coded heuristics for the same reasons.
  - paulgb 4y ago
    Small bills are funny. I'm surprised if the interchange fees don't net out negative for the biller. My most recent Rackspace bill was $0.05. I don't even remember what I'm using it for any more, but it's not worth it to check out. My last Pulumi bill was $0.86.
    - kdeldycke 4y ago
      > surprised if the interchange fees don't net out negative for the biller That's worth investigating! Now in a fictional, adversarial way, you can think of a bot exploiting this discrepancy to bankrupt a competitor: create dozens of fake accounts, consume just shy of $0.01 of resources, and have the platform pays 30x more in payment fees (public Stripe price is 30¢/transaction). To incur a net loss of $1,000,000, you’ll have to find an antagonist ready to create 3,448,276 accounts (1_000_000 / (0.30 - 0.01)), each with their own identity and mean of payment, for a total of $34,482.76. Fortunately this is highly impractical and will be caught real fast by your internal anti-abuse systems (you have those in place right?).
      - karambahh 4y ago
        Is it that impratical? Small players would be impacted by a 100k$ net loss...and you could even spread it out over several months to be less likely to be caught by anti-abuse systems...
  - jrockway 4y ago
    I was in this position and Stripe let me carry over the line items until eventually an invoice was billable, if I recall correctly. Though I might have just manually waived these charges as a courtesy.
epberry 4y ago
I don't necessarily think that billing which is hard to estimate is good for anyone. For large deals I've seen this be a real turn off. Same with surprise bills. Ultimately if the service can scale billing in a way that their value scales to the customer (Datadog and Snowflake come close to this) then both the provider and the customer will be happy.
- superzamp 4y ago
  Side story, and that might not be true as of today, but Datadog was a nightmare billing-wise for me. Probably precisely because they didn't use a tool like the one launched in this post. Anything ranging from seeing your live usage to getting a rough idea of what your bill at the end of the month would be was impossible, not to mention the absence of any kind of alert even after reaching $30x our previous month usage. Usage based is fantastic when done properly, but can quickly turn to a nightmare for the user on half-assed systems.
  - AnhTho_FR 4y ago
    I heard they only fully automated it post IPO, and have a full team of senior engineers + PM on this topic now!

Rafsark 4y ago

In my opinion, the future of billing lies in a hybrid approach. Former subscription- or per-seat-based models were too restrictive. Subscriptions with capped features prevented users from upselling and generating more revenue. The gap between the base subscription and upsell was often too large. I agree that usage-based billing can be difficult to predict revenue from. We don't think companies will switch entirely to this model. However, the hybrid model can be beneficial for both customers and vendors. Companies can charge a base platform fee and then charge for overage instead of blocking it. This could increase revenue for companies that currently use subscription-based billing.

jrockway 4y ago

I'm a big fan of usage based billing. It lets small users have small bills. Per-seat pricing has always felt annoying to me. Ideally you want everyone at your company to be able to access the tools that everyone else uses (you don't want to create a bunch of second class citizens), but that gets really expensive really quickly. So per-user-per-month has never felt great to me. That said, usage-based billing is confusing. And when customers are confused, they simply chargeback the credit card charge. AWS can make it work, but I'm not sure if everyone else can. Will be interesting to see.

swyx 4y ago
> And when customers are confused, they simply chargeback the credit card charge. this is not good faith B2B behavior. i'd be surprised if 1% of B2B usage based billing customers behave like this.
- AnhTho_FR 4y ago
  I think B2B users would rather dispute the invoice with their account manager and might get a discount.
- jrockway 4y ago
  I agree that it's not good faith, but speaking from the position of someone who has offered self-service signup... that's what customers did. They'd create an account, start using the service, ignore emails from their account manager, and then dispute the bill when we charged their card. This is rare, of course, but it is something you have to expect when you give someone free reign to spend money and then bill them at the end of the month. It's something you have to expect, and kind of gauge how much money the customer has and send them lots of email as they approach a limit, and make it very clear in the UI that money is being spent that they will soon have to pay. Even then, who knows what people will do. It's bad faith on their part; you, the service provider, are the ones penalized.
kdeldycke 4y ago
Small bills are cool, until it's too small. I remember having to negotiate with Stripe the removal of their lowest limits. The quantum of unit I was billing on my cloud platform was such that you could consume just enough CPU and storage to end up with a $0.01 invoice at the end of the month. It was impossible for Stripe to process this payment. IIRC their lowest limit was $0.50 or $0.10. I guess they had this limit in place to prevent abuse and limit fraud. As we had similar hard-coded heuristics for the same reasons.
- paulgb 4y ago
  Small bills are funny. I'm surprised if the interchange fees don't net out negative for the biller. My most recent Rackspace bill was $0.05. I don't even remember what I'm using it for any more, but it's not worth it to check out. My last Pulumi bill was $0.86.
  - kdeldycke 4y ago
    > surprised if the interchange fees don't net out negative for the biller That's worth investigating! Now in a fictional, adversarial way, you can think of a bot exploiting this discrepancy to bankrupt a competitor: create dozens of fake accounts, consume just shy of $0.01 of resources, and have the platform pays 30x more in payment fees (public Stripe price is 30¢/transaction). To incur a net loss of $1,000,000, you’ll have to find an antagonist ready to create 3,448,276 accounts (1_000_000 / (0.30 - 0.01)), each with their own identity and mean of payment, for a total of $34,482.76. Fortunately this is highly impractical and will be caught real fast by your internal anti-abuse systems (you have those in place right?).
    - karambahh 4y ago
      Is it that impratical? Small players would be impacted by a 100k$ net loss...and you could even spread it out over several months to be less likely to be caught by anti-abuse systems...
- jrockway 4y ago
  I was in this position and Stripe let me carry over the line items until eventually an invoice was billable, if I recall correctly. Though I might have just manually waived these charges as a courtesy.

epberry 4y ago

I don't necessarily think that billing which is hard to estimate is good for anyone. For large deals I've seen this be a real turn off. Same with surprise bills. Ultimately if the service can scale billing in a way that their value scales to the customer (Datadog and Snowflake come close to this) then both the provider and the customer will be happy.

superzamp 4y ago
Side story, and that might not be true as of today, but Datadog was a nightmare billing-wise for me. Probably precisely because they didn't use a tool like the one launched in this post. Anything ranging from seeing your live usage to getting a rough idea of what your bill at the end of the month would be was impossible, not to mention the absence of any kind of alert even after reaching $30x our previous month usage. Usage based is fantastic when done properly, but can quickly turn to a nightmare for the user on half-assed systems.
- AnhTho_FR 4y ago
  I heard they only fully automated it post IPO, and have a full team of senior engineers + PM on this topic now!