Business models
The pay as you go business model
The pay as you go business model: customers pay only for what they use, so the bill grows with them. With no big commitment up front, it is easy to start.
How it makes money
With no big commitment up front, it is easy to start. Revenue grows by itself as customers grow, although income is harder to predict than with a subscription.
Real examples
- Amazon Web Services charges for the computing used.
- Twilio charges per message and call.
The numbers to watch
- Revenue per customer over time
- Usage growth among existing customers
- Cost per unit served
Who it fits
Infrastructure and tools whose value goes up with use.
What goes wrong
A customer gets a surprise bill and leaves, or a few big customers make up most of your income.
Try it this week
Find the unit people naturally think in, such as messages or hours. That is what you charge for.
Then give it a time: one block of 90 minutes this week, in your calendar. Our playbooks have the next steps for finding your first customers.
Questions
What is an example of the pay as you go model?
Amazon Web Services charges for the computing used.
What is the biggest risk with the pay as you go model?
A customer gets a surprise bill and leaves, or a few big customers make up most of your income..
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