Billing & Monetization

How Metered Billing Benefits Your Business

April 12, 2022

Metered billing isn’t a new concept – think of everyday staples like water, electricity, and gas. What is novel, however, is the companies across numerous and diverse industry sectors now adopting this pricing model. Customers want the flexibility metered billing provides and companies receive unprecedented value – a win-win situation for everyone! When it comes to metered billing benefits, this popular billing model certainly doesn’t fall short.

Metered Billing Benefits to Consider

To help put its advantages in perspective, we’ve counted down the top 13 benefits of metered billing.

  1. Provides the agility and flexibility to quickly respond to changing business and customer needs.
  2. Aligns price more precisely with the value of the product or service.
  3. Enables businesses to grow faster with price points that are attractive across buyer personas.
  4. Expands the potential market by providing startups and small and medium-sized businesses (SMBs) with cost-effective access to high-quality products and services.
  5. Removes or shortens the purchasing cycle by eliminating up-front investment.
  6. Improves customer retention by allowing customers to upgrade or downgrade based on their needs and budgets.
  7. Improves customer loyalty, which lowers costs associated with customer acquisition efforts.
  8. Provides the ability to increase or decrease pricing based on supply and demand, peak/off seasons, etc.
  9. Reduces revenue leakage by optimizing product and service usage.
  10. Allows fast and easy experimentation and testing of recurring revenue and metered-based pricing combinations.
  11. Delivers a competitive advantage by enabling you to combine metered-based pricing models with an assortment of features, functions, and options to create differentiated packages and bundles.
  12. Affords the opportunity to collect and analyze an abundant amount of data on customer usage and trends for better decision-making.
  13. Increases investor appeal – on average, companies that incorporate a metered-based billing model trade at a 50% higher revenue multiple premium over their counterparts.

This scalable and highly adaptable pricing model enables better monetization for business offerings. All while customers gain peace of mind because they pay for exactly what they consume.

Metered Billing in Action

Companies across a variety of industries are adopting metered billing. The following explains how some industries are harnessing the benefits of metered billing.

  • Insurance: Measuring driving habits like mileage, braking, speed, and even cellphone use, usage-based car insurance provides drivers with discounts on premiums.
  • Electronic Car (EV) Charging Services: Public charging stations vary greatly. Some providers charge on a per-minute basis and others on the kWh of electricity used.
  • Telecommunications: Most wireless carriers provide unlimited talk and text, and sometimes data. If data isn’t unlimited and the customer exceeds their cap, then carriers can enforce a surcharge.
  • Cable & Satellite: With multiple television program packages, on-demand movies, streaming services, internet access, etc., cable and satellite companies offer a variety of packages and additional functionality. Some examples include sporting events and movies that encounter additional charges.
  • Internet: Customers pay a fixed rate according to the data plan purchased. Then if usage exceeds the plan, additional charges are assessed for the extra gigabytes or terabytes used that billing period.
  • Entertainment Websites: Whether streaming music or movies, customers pay a monthly subscription fee. Additionally, streaming music companies charge based on the number of times a song is played or downloaded. Online movie streaming services charge a subscription fee, and based on the number of devices used to stream the content.
  • Web Services/IT Hardware: Infrastructure-as-a-service (IaaS), software-as-a-service (SaaS), and platform-as-a-service (PaaS) from public cloud providers offer a variety of options. They contain different functionality and allow customers to 1) pay based on consumed resources or the number of users, 2) increase or decrease usage as their requirements change, 3) and in some cases, create custom packages/pricing.
  • Ridesharing: While pricing models vary, typically passengers pay per mile/minute. That’s in addition to a booking fee, tolls, surcharges, and tips.

Metered Billing Benefits are Amplified With IoT

From autonomous vehicles, traffic management, smart grids, smart cities, and smart homes through agriculture, healthcare, supply chain, and retail to name a few – the Internet of Things (IoT) is providing industries with the fuel needed to develop and offer metered billing pricing schemes. For example, with prices that range from under $100 to upwards of $3,000, many electric scooter companies are now renting this transportation device as well as offering conventional sales.

The sale of an expensive scooter can provide significant revenue. Renting the same scooter numerous times and charging based on mileage, day, time, or peak/off-season or a combination of these parameters provides the ability to continually collect revenue each time the scooter is rented. Over time this results in more revenue than a one-time sales transaction, and this is where the IoT is essential to make scooter rentals a profitable reality.

To start, the scooter needs a sophisticated sensor to track data such as route, location, ride duration, and mileage. This data is sent, in real-time, to the scooter store’s billing system. There the billing events are processed, an accurate invoice created, and payment is applied. However, capturing and ingesting this much data from various sources, monetizing IoT device data, and automating revenue recognition isn’t easy. To ensure efficient and accurate charges, data must be transformed and normalized. Mediation provides the ability to easily monetize IoT services or other consumption-based business models, turning usage into revenue.

Metered Billing – Are You a Fit?

With the number of billing models available, how do you know if metered billing is the right choice? Here’s a list of questions to determine if metered billing benefits your organization.

  • Do your costs fluctuate depending on the number of customers using your products and services?
  • Do usage patterns vary based on supply/demand, seasons, etc.?
  • Can you offer a variety of pricing tiers?
  • Are you able to effectively charge based on the value of your products and services?
  • Do your customers use an increasing amount of your products and services, but then pay a flat rate?
  • Are you receiving customer complaints that they are paying too much for your products and services?
  • Can you increase revenue by moving to metered billing?

If you answered yes to one or more of these questions, metered billing may be right for you.

To maximize the benefits of metered billing, you need the right billing platform. One that easily adapts to a limitless number of business models and allows you to aggregate and analyze usage data from any source. BillingPlatform delivers.

To put you on the path to metered billing profitability, you need a billing platform that provides built-in mediation. With us as your partner, you’re able to gather usage data from any source and transform it into revenue potential – in real-time. Contact our team of experts to learn more.

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