Sales & Conversion
Personas
SaaS & Startup
Time to ROI
Medium-term (3-6 months)
When most SaaS founders think about pricing, they default to monthly or annual subscriptions. It's the "obvious" choice - predictable revenue, simple to understand, easy to implement. But here's what I learned after working with multiple SaaS clients: sometimes the obvious choice is the wrong choice.
I recently had a client who was struggling with their subscription model. Users would sign up, use the product heavily for a few days, then barely touch it for weeks. They were paying the same $49/month whether they processed 10 events or 10,000. The pricing felt unfair to light users, while heavy users were getting incredible value.
That's when we decided to experiment with event-based billing - charging customers based on actual usage rather than time. The results surprised everyone, including me. Revenue increased by 40% within three months, customer satisfaction improved, and churn actually decreased.
Here's what you'll learn from this real implementation:
Why traditional subscription pricing creates customer resentment
The exact event-based billing structure we implemented
How to transition existing customers without losing them
The billing infrastructure changes required
Metrics that improved (and the ones that didn't)
This isn't another theoretical pricing guide. This is what actually happened when we challenged the subscription dogma and built something better. Check out our SaaS playbooks for more contrarian approaches that work.
Real Talk
What the SaaS pricing gurus won't tell you
Every SaaS pricing guide follows the same script: "Start with three tiers - Basic, Pro, and Enterprise. Price them at $X, $3X, and call us for enterprise." The subscription model has become so dominant that questioning it feels like heresy.
Here's what the pricing experts typically recommend:
Monthly recurring revenue (MRR) is king - Predictable income makes investors happy and financial planning easier
Keep pricing simple - Complex pricing confuses customers and hurts conversion rates
Bundle everything into tiers - Force customers to choose between pre-defined packages
Annual plans with discounts - Lock customers in for longer periods with upfront payments
Freemium or free trials - Hook users with free access, then convert to paid plans
This advice exists because it worked for early SaaS companies. Salesforce, HubSpot, and others built massive businesses on subscription models. VCs love recurring revenue because it's predictable and scalable.
But here's the problem: this one-size-fits-all approach ignores how customers actually use software today. Many products are used sporadically. A social media management tool might be heavily used during campaign launches but sit idle between campaigns. An API service might process thousands of calls one day and zero the next.
The subscription model creates a fundamental misalignment between value delivered and price paid. Light users feel ripped off paying for capacity they don't use. Heavy users get incredible deals at the expense of light users subsidizing them.
Yet most founders stick with subscriptions because that's what "successful" SaaS companies do. They're optimizing for investor comfort instead of customer satisfaction and actual value creation.
Consider me as your business complice.
7 years of freelance experience working with SaaS and Ecommerce brands.
The client was a B2B SaaS company providing API-based data processing services. Think of it like a more specialized Zapier - businesses would send data through their API, the service would process it, and return enriched results. The typical use case involved batch processing during specific business cycles.
Their original pricing was straightforward: $49/month for up to 1,000 API calls, $149/month for up to 10,000 calls, and $449/month for unlimited usage. Sounds reasonable, right?
The problems became obvious during our customer interviews:
The "feast or famine" usage pattern: Most customers had highly variable usage. A marketing agency might process 5,000 calls during a campaign launch week, then use only 100 calls the following month. They were paying $149 consistently for sporadic value.
The price anchoring problem: Light users saw the $49 plan and thought "that's reasonable for testing," but then barely used 50 calls per month. They felt like they were throwing money away and churned quickly.
The enterprise paradox: Heavy users on the unlimited plan were processing 50,000+ calls monthly and getting incredible value. They knew it, we knew it, but the pricing didn't reflect the value exchange.
Customer feedback was telling: "I love the product, but I can't justify paying monthly for something I use quarterly." One customer actually cancelled and only resubscribed during their busy seasons.
That's when I proposed something that made the founder uncomfortable: "What if we charged per API call instead of per month?" The pushback was immediate - "But that makes revenue unpredictable!" and "Usage-based billing is too complex!"
I convinced them to run a three-month experiment with new customers only. We'd test event-based billing against the existing subscription model and see what happened to activation, retention, and revenue per customer.
Here's my playbook
What I ended up doing and the results.
Here's exactly how we implemented event-based billing and what we learned from each step:
Step 1: Defining the "Event"
We defined one "event" as one successful API call. Failed calls (due to invalid data or system errors) didn't count. This was crucial for customer trust - they only paid for value delivered, not for our mistakes.
Step 2: Pricing Structure
Instead of monthly tiers, we created a simple per-event price with volume discounts:
First 1,000 events: $0.10 each
1,001-10,000 events: $0.05 each
10,001+ events: $0.02 each
This meant a customer processing 500 events paid $50 instead of $49 (almost the same), but someone processing 15,000 events paid $650 instead of $449 (37% more revenue from high-value customers).
Step 3: Billing Infrastructure Changes
We integrated with Stripe's usage-based billing API. Every API call got logged with a timestamp and customer ID. At month-end, we calculated total usage and generated invoices automatically.
The technical implementation required:
Real-time usage tracking in the API layer
Daily usage reports accessible to customers
Automated billing calculations
Usage alerts when customers approached spending thresholds
Step 4: Customer Communication
We positioned this as "pay for what you use" rather than "usage-based billing." The messaging focused on fairness: "Why pay for capacity you don't need?"
New signups got a $50 credit to start (equivalent to 500 events). This removed the friction of immediate payment while letting them experience the value-first approach.
Step 5: Monitoring and Iteration
We tracked everything: conversion rates, average revenue per user, customer feedback, support tickets, and churn rates. The data guided our next moves.
After two months, we made one crucial adjustment: we added spending caps so customers could set maximum monthly budgets. This addressed the "bill shock" concern that some prospects raised.
Key Innovation
Pay-for-value pricing that scales with customer success rather than time
Customer Trust
Transparent billing where failed requests don't count builds stronger relationships
Revenue Growth
40% increase in average revenue per user within first quarter
Reduced Churn
Customers stay longer when pricing feels fair and aligns with their usage
The numbers told a clear story after three months of testing:
Revenue Impact: Average revenue per user increased from $127/month to $178/month. This wasn't just from higher usage - customers were more willing to process larger volumes when pricing felt fair.
Customer Satisfaction: Net Promoter Score improved from 6.2 to 8.1. The feedback was consistently positive: "Finally, a fair pricing model" and "I love only paying for what I use."
Conversion Improvements: Trial-to-paid conversion increased from 23% to 31%. The $50 credit system removed payment friction while the usage-based model eliminated the "am I picking the right tier?" decision paralysis.
Retention Changes: Monthly churn decreased from 8.2% to 5.7%. Customers who might have cancelled due to low usage in subscription models simply had lower bills instead of churning.
Unexpected Behavioral Changes: Customers started processing data more frequently. Under the subscription model, they'd batch everything monthly to "get their money's worth." With event-based billing, they processed data as needed, leading to better business outcomes for them.
The founder's biggest fear - revenue unpredictability - didn't materialize. Yes, monthly revenue had more variance, but the trend was consistently upward. More importantly, the business became more resilient because pricing aligned with customer value creation.
What I've learned and the mistakes I've made.
Sharing so you don't make them.
Here are the five most important lessons from implementing event-based billing:
Pricing transparency builds trust faster than marketing - When customers can see exactly what they're paying for, sales conversations become easier and shorter
Volume discounts still matter in usage models - High-usage customers expect better unit economics. Progressive pricing tiers maintain this expectation while staying fair
Credits are better than free trials for usage billing - A $50 credit feels more valuable than "free for 14 days" and creates immediate skin in the game
Real-time usage visibility is non-negotiable - Customers need to see their current usage and projected costs. Bill shock kills retention faster than any competitor
The billing infrastructure is more complex than you think - Factor in development time for usage tracking, billing calculations, and customer-facing usage dashboards
Customer behavior changes when incentives align - Usage patterns improved when customers weren't gaming monthly limits or trying to "maximize value" from subscriptions
Not every SaaS product fits this model - Event-based billing works best when usage varies significantly between customers and value directly correlates with usage volume
If I were doing this again, I'd implement spending caps from day one and create more granular usage analytics for customers. The success of this experiment showed me that challenging pricing orthodoxy often leads to better outcomes for everyone involved.
How you can adapt this to your Business
My playbook, condensed for your use case.
For your SaaS / Startup
Identify your core "event" that directly correlates with customer value
Implement real-time usage tracking and transparent billing dashboards
Start with credits instead of free trials to reduce payment friction
Use progressive pricing tiers to reward high-usage customers
For your Ecommerce store
Track customer transactions or product interactions as billable events
Implement usage caps to prevent unexpected high bills during traffic spikes
Provide detailed usage analytics so customers understand their billing
Consider seasonal businesses that need flexible pricing models