The Complete Roadmap for Usage-Based Pricing

Usage-based pricing (UBP) has become a game-changer for many SaaS companies, offering flexibility and scalability for both businesses and customers. But implementing UBP is anything but simple. From billing complexities to sales incentives, there are major hurdles that must be addressed upfront.

Join Camela Thompson, Head of Marketing at RevOps Co-op, Shannon Wiggen, Operations Leader at ActiveProspect, and James McArthur, Head of RevOps at Nue, as they walk through key lessons learned from real-world UBP implementations and how to navigate the complexities of this pricing model.

Why Usage-Based Pricing?

Many companies move to usage-based pricing to make their product more accessible to early users while increasing revenue as customers scale. But before jumping in, RevOps leaders need to ask:

• Is our product sticky enough? If customers don’t actively use your product, UBP may cause churn rather than growth.
• How will we meter and track usage? Without accurate real-time tracking, billing can quickly become a nightmare.
• What happens when customers exceed their usage limits? Clear communication on overage charges and billing expectations is critical.

"If every time someone does something in your product, you don’t get a signal that says ‘charge this person,’ you’re literally throwing money into the void." – James McArthur

For a deeper dive into the operational challenges of UBP, check out Tackling the Operational Complexities of Usage-Based Pricing.

Lessons Learned: The Do’s and Don’ts of UBP

1. Set the Right Expectations with Customers

‍Shannon Wiggen shared how critical it is to set clear expectations upfront during the sales and onboarding process. When customers receive an unexpectedly high invoice, it creates frustration and potential churn.

• Communicate variability – Help customers understand that their bill may fluctuate based on usage.
• Proactively notify customers of overages – No one likes surprise charges.
• Provide forecasting tools – Give customers visibility into their expected usage and costs.

2. Ensure Your Internal Teams Are Aligned

Usage-based pricing affects more than just RevOps—it impacts sales, customer success, and finance as well. Lack of alignment can lead to:

• Sales over-promising pricing structures that aren't feasible.
• Customer success teams dealing with angry customers over unexpected bills.
• Finance struggling with revenue forecasting due to unpredictable fluctuations.

"Wouldn't it be great if RevOps was involved when a company starts thinking about usage-based pricing, instead of being told after the fact?" – Camela Thompson

For insights on aligning sales and finance workflows effectively, read The Must-Dos for Scaling Effective Sales to Finance Workflows.

3. Sales Compensation Needs to Adapt

One of the biggest challenges in UBP is how to compensate sales teams fairly. Unlike traditional subscriptions, revenue from UBP can be unpredictable.Two common approaches:

• Baseline quota with usage-driven bonuses – Pay reps upfront on expected usage, with a quarterly true-up based on actual usage.
• Credit burndown models – Customers pre-purchase credits, and reps earn commissions based on usage over time.

Shannon Wiggen explained that at ActiveProspect, sales teams are compensated on both committed revenue and overages, ensuring they are incentivized for customer growth.

For more insights on sales compensation strategies, see A Guide to Inside Sales Compensation Plans.

4. Plan for Compliance and Revenue Recognition

Companies that scale under UBP without proper governance often find themselves in trouble when it’s time for an audit.

‍James McArthur shared a cautionary tale:

"A company I worked with had to spend months fixing their records before going public because they weren’t reporting usage revenue correctly. Usage-based pricing can get messy if you don’t start with proper compliance in mind."

To avoid this, RevOps teams should:

• Define clear revenue recognition policies early.
• Ensure pricing aligns with ASC 606 standards.
• Integrate real-time data tracking into finance systems.

For a comprehensive guide on UBP billing, refer to A 2024 RevOps Guide to Usage-Pricing and Billing.

5. Build the Right Tech Stack

Usage-based pricing requires a different set of tools than traditional subscriptions.

• Billing & metering systems – Accurately track and bill usage (e.g., Nue).
• CPQ and quoting tools – Enable flexible contract terms.
• CRM integrations – Ensure sales has visibility into customer usage trends.

"Every time you connect two systems, those connections are the first thing to break. Plan your architecture carefully." – James McArthur

To learn more about modernizing your quote-to-revenue process, explore The Next Generation of Quote-to-Revenue: Simplify SaaS Pricing with Nue.

Building a Roadmap for Success

If you’re considering usage-based pricing, don’t rush into it without a clear strategy.

Step 1: Data Readiness

• Identify what you’re metering (API calls, storage, transactions)
• Ensure real-time data tracking is in place

Step 2: Sales & Customer Success Readiness

• Train teams on how to communicate UBP effectively
• Create forecasting tools for customers
• Define sales incentives aligned with growth

Step 3: Technical & Financial Readiness

• Ensure compliance with revenue recognition rules
• Invest in a scalable billing system
• Plan for integration across your tech stack

"The worst thing you can do is start selling usage-based pricing before you've figured out how to track and bill it accurately." – Camela Thompson

Final Thoughts

Usage-based pricing is powerful, but only if implemented correctly. Before making the shift, RevOps, Sales, and Finance must be aligned to avoid hidden pitfalls.

Looking for more insights on scaling revenue models? Check out the RevOps Co-op blog for expert perspectives and best practices!