---
title: 4 Considerations Of Consumption-Based Pricing | Rev.io
description: Do you know what it takes to support a usage-based billing service? Read four key points to consider so you can avoid potential pitfalls with your service.
---

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# [4 Considerations Of Consumption-Based Pricing | Rev.io](https://www.rev.io/blog/solutions/4-considerations-consumption-based-pricing)

 Written by [Evan Rice](https://www.rev.io/blog/author/evan-rice) | Nov 29, 2017 5:00:00 AM

Is a pay-as-you-go pricing model and billing strategy the next big industry trend?

As [subscription](https://rev.io/industries/subscription/) and [IoT service providers](https://rev.io/industries/iot-billing/), you can’t afford to fall behind your competition or ignore key changes in the market. That’s why we’ve decided to take a closer look at consumption-based pricing and what it takes to successfully support a usage-based service.

Subscription-based billing models have become the go-to strategy for many industries. In 2000, Salesforce.com was among the first in the software industry to charge a per-user, per-month price. Today, industry leaders are looking further than a simple subscription model to adopting consumption-based offerings instead. In fact, a growing number of subscription and IoT companies are shifting from flat-rate monthly fees to pay-as-you-go pricing.If you’re looking to disrupt your market with a usage-based pricing service, take a look at our 4 “gotchas” and avoid some of the potential pitfalls.

### 1. managing usage

One key element to offering a  pay-per-use model is advanced billing capabilities. In order to successfully create a consumption-based business, you’ll need to be an expert in managing customers, calculating usage, and billing operations. Rather than throwing people at a broken problem, look for a usage-based billing system that can take your back-office to the next level. Carefully evaluate each vendor’s ease of integration, existing carrier [provisioning](https://www.rev.io/blog/solutions/automated-provisioning), and development roadmap for enhancements. It’s important to find a partner that will evolve with your business.

### 2. forecasting revenue

Subscription services are predictable – making it easy to forecast long-term revenue. When offering a pay-per-use service, one thing to consider is standardizing your revenue with a monthly minimum charge. Even a small monthly minimum fee will help you forecast and provide a baseline for the financial health of your organization.

### 3. avoiding bill shock

Alleviate the possibility of higher-than-anticipated bills by providing your end-customers with a [self-service portal](https://rev.io/solutions/self-service-enablement/) for viewing usage, creating support tickets, and monitoring new orders. The best types of customer portals come with built-in reports and the ability to create custom reports. In addition to avoiding bill shock, customer-facing portals increase satisfaction and retention.

### 4. consumption based technologies

Your success hinges on your technologies. Consumption-based pricing solutions require different technologies and processes than traditional flat-rate pricing models. When you’re looking for new or improved billing and back-office software, be sure your platform has functionality for real-time usage reporting, automated rating, built-in tax calculation, improving customer visibility, and billing flexibility. An intelligent [usage-based billing](https://www.rev.io/blog/insights/adopting-usage-based-billing) system will complement your service offering – and make it easier for you to [monetize](https://www.rev.io/blog/insights/6319-monetizing-your-iot-products-and-services) any pricing model.

Don’t let a flat-rate flat-line your revenue, check out our full [eBook – Capturing Recurring Revenue with Usage-Based Pricing ](https://go.rev.io/usage_based_pricing_WP)for more information!

Don’t leave your success to chance. Partner with the right technology providers to ensure successful pay-as-you-go pricing adoption. Rev.io’s [all-in-one-solution](https://rev.io/solutions/sophisticated-billing/) can tackle billing, customer management, tax calculation, reporting, order and service tracking, and more. We would love to help you disrupt your market! Our usage-based billing platform is perfect for subscription and IoT service providers looking to scale – let Rev.io take your team to the next level! [Contact Rev.io](https://rev.io/contact-us/) by filling out a quick form or giving us a call at 866-470-5502 and learn more today!

[View full post](https://www.rev.io/blog/solutions/4-considerations-consumption-based-pricing)

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