One key question is the extent to which your own costs depend on usage. Some companies have to stick with usage-based pricing because otherwise they'd go under

One key question is the extent to which your own costs depend on usage. Some companies have to stick with usage-based pricing because otherwise they'd go under (unless they're well-funded). The downside of this approach, as others have noted, is that this tends to depress usage and generally makes a product less sticky because people are hesitant to embed it in their workflow. If your costs don't vary a ton with usage, it could be better to offer subscription pricing. If need be you can offer tiers that support different levels of usage. You can also feature-gate other aspects of your product, so it doesn't seem like you're pricing based on usage per se. Rather, you'd be charging more for customers that need SSO, more than X seats, SLAs, etc. I will say that one downside to having minimal marginal costs is that some customers will bristle at paying value-based prices. They'll think that if your cost is minimal then they shouldn't be paying much for your service. It's really interesting to read all the different perspectives shared below. We each have our unique portal onto the pricing landscape, and seeing what others have learned, and how they put their perspective into words, is quite enlightening.