Consumption-based pricing addresses age-old customer concerns about paying upfront for a SaaS solution without any guarantee around adoption, usage, or outcomes. When customers pay only for what they use, cost is tied directly to value. This alignment has potential benefits for both customers and SaaS providers, many of which are looking at adopting consumption-based pricing models as an alternative to the subscription model. A great product married with an easy-to-understand consumption- based pricing model can pack a powerful one-two punch for your business. Just as you invest in R&D to drive product innovation and continue to provide value to customers, investing in revenue model innovation can create more value from existing products. Effective execution of a true consumption-based methodology takes much of the friction out of the sales cycle and enables faster expansion of your customer base. EXECUTIVE SUMMARY However, making this shift involves tackling five key areas—all of which require SaaS providers to think strategically and leverage their data and insights to the fullest extent: 1. Pick a value metric. 2 . Modernize your sales process and compensation structure. 3. Rethink your revenue playbook. 4. Help customers predict and optimize spend. 5. Leverage data. Read on to learn why you should consider changing your pricing model and get recommended steps to make it happen. 3