Startup Funding Espresso – Number of User-Based Pricing

Number of User-Based Pricing

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

The number of user-based pricing sets the price based on users.

This works for enterprise customers where there are a number of workers who need to access the platform.

This makes it easy to forecast and budget the cost of the product.

The downside is that the customer may end up paying for users that don’t use the product.

For a number of users-based pricing, consider the following:

This pricing disincentives the company to add more users to the system.

It can increase churn as a customer with a larger number of users will have a higher churn rate than those with a smaller number of users.

The product's value will vary from one user to the next without capturing revenue from the higher-value group.

It opens the door for misuse as some customers may have their workers share logins to hide the number of users.

Instead of pricing on a fixed user count, price on active users which provides a more accurate usage than seats.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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