What is “Tiered usage” ?
Tiered usage is a subscription billing model that charges customers based on the amount of usage, but with different pricing tiers structured based on different factors. For example, a software company may charge customers based on the number of users or the level of access to certain features. This pricing model is designed to offer customers more flexibility in choosing a pricing tier that best fits their needs, while also allowing businesses to generate additional revenue from customers who use their product or service more frequently.
For example, a web hosting company may offer a tiered usage subscription plan that charges customers based on the amount of data transfer or the number of websites hosted. Customers can choose the pricing tier that best suits their needs, and the business can generate more revenue from customers who require higher levels of service. Another example is a music streaming service that charges customers based on the number of devices they use to access the service or the level of sound quality they want.
Is there any difference between Tiered Usages and “Tiered pricing” in the subscription billing strategy ?
The main difference between “Tiered Usage” and “Tiered Pricing” in the subscription billing strategy is how the pricing tiers are structured.
In Tiered Usage, the pricing tiers are based on the amount of usage of the product or service. For example, a software company might charge different prices based on the number of users or the amount of data consumed by each user.
On the other hand, in Tiered Pricing, the pricing tiers are based on different features or levels of service. For example, a software company might offer different pricing tiers based on the number of features or services included in each tier.
In essence, Tiered Usage is based on how much a customer uses the product or service, while Tiered Pricing is based on the different levels of service or features offered.
Cases
5 examples of businesses that use the tiered usage subscription billing model:
- Amazon Web Services: AWS offers a tiered usage pricing model for its cloud computing services, where customers are charged based on the amount of data storage, compute power, and other resources they use.
- Hootsuite: Hootsuite offers a tiered usage subscription plan for its social media management platform, where customers are charged based on the number of social media accounts they manage and the level of analytics they require.
- Mailchimp: Mailchimp offers a tiered usage subscription plan for its email marketing platform, where customers are charged based on the number of subscribers they have and the level of features they require.
- Zendesk: Zendesk offers a tiered usage subscription plan for its customer service platform, where customers are charged based on the number of support agents they have and the level of features they require.
- Google Maps Platform: Google Maps Platform offers a tiered usage pricing model for its mapping services, where customers are charged based on the number of requests they make to the API and the level of features they require.