Consumption Forecasting: How to do it
For SaaS companies, consumption-based pricing or usage-based pricing has emerged as a strategy to align costs with consumption, providing transparency…
Category: Usage Based Pricing
Why SaaS Companies Are Adopting Consumption Pricing Models
Across the SaaS industry, one of the most significant shifts in recent years has been the move away from fixed-fee subscription models and toward consumption pricing models. These usage-based pricing structures are changing how companies generate revenue, how customers adopt software, and how success is measured.
Actuals vs. Forecasts: A Focus as Companies Shift to Usage-Based Models
As more businesses transition to consumption or usage-based revenue models, the comparison of Actuals vs. Forecasts needs to become a central focus. This analysis is key to navigating the variability inherent in these models and ensuring that companies can adapt quickly to changing customer behavior and market conditions.
Best Practices for Consumption Forecasting
Consumption-based revenue models introduce a layer of complexity that traditional forecasting methods struggle to handle. Unlike fixed revenue contracts, consumption revenue is dynamic—fluctuating based on customer behavior, seasonality, product adoption, and a host of other variables. To get ahead, businesses need to rethink their approach to forecasting.
Deal Modeling of Consumption for GTM and Account Planning
As businesses shift to consumption-based go-to-market strategies, forecasting revenue has become increasingly complex. Whether it’s API calls, data storage, or platform usage, traditional forecasting methods designed for fixed or subscription pricing models no longer suffice. Organizations need a more dynamic approach to predicting revenue growth—one that accounts for real-time customer usage and adapts to changing consumption patterns.
Salesforce Consumption Forecasting: Everything You Need to Know
Revenue teams have long relied on pipeline data to predict revenue, but as more businesses move toward consumption-based pricing, traditional forecasting methods simply don’t cut it anymore. Enter Salesforce’s Consumption Forecasting, a new feature designed to help businesses track and predict revenue based on actual product usage. This is a critical tool for RevOps teams who are managing these complex, dynamic models. But while Salesforce has made a big leap forward, there’s still a gap to be filled when it comes to making those forecasts actionable and aligned with broader revenue goals.
The Shift to Usage-Based Pricing
Pricing strategies shape more than just revenue—they define how businesses grow and evolve in a competitive market. While subscription-based pricing has long been a staple for recurring revenue, usage-based pricing is emerging as the model of choice for businesses that prioritize flexibility, transparency, and alignment with customer behavior.
How Consumption-Based Pricing is Impacting Different Industries
Consumption-based pricing is a dynamic model where customers are charged based on actual resource or service usage rather than a fixed fee or subscription. This approach is transforming various industries by driving innovation, enhancing customer experiences, and offering flexibility that benefits both customers and businesses. Let’s see how industries are reshaping their pricing strategies through consumption-based models—and why accurate revenue forecasting is critical to their success.
What is Consumption-Based Pricing?
Consumption-based pricing is quickly becoming a powerful approach, providing flexibility that allows customers to pay only for the resources they use—whether it’s storage, API calls, or CPU hours. Known as pay-as-you-go, metered billing, or usage-based pricing, this model is increasingly popular across industries like cloud computing, IaaS, SaaS. While it offers clear benefits for both users and providers, this flexibility brings unique challenges to the forefront, particularly around revenue predictability and effective resource allocation.