How to Scale with Usage-based Pricing | Kyle Poyar

10:44PM Apr 14, 2022

Speakers:

Keywords:

customers

usage

usage based pricing

folks

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snowflake

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You'll be doing podium probably to give the presentation but

yeah, although

I guess we're live now. Yeah. Are we live? Okay,

I'm just miked up so I might just not do a podium then. Okay. Just walk around.

Hey, everybody. Thanks for joining us. Like we still got some people leaving from the previous session. Great to have you here. So, we're gonna be talking about how to scale your company with usage based pricing, which is actually personally very interesting to me. I used to be a customer of SAS software and I have I have opinions and feelings about this, but I'll save those until after you give your presentation. I'm talking to Kyle player here who is our guest. He's a partner at OpenView. He leads their growth team and responsible for advising the portfolio. Teams, they're on strategies to increase revenue growth dominate their markets. Yeah, lots of highs helped the portfolio generate over 100 million in additional enterprise value in the last three years. So thanks very much for joining us. Yeah, I guess you want to take it away with the presentation first. And remember to submit your questions. So just scan the thing up here. If you've probably been doing it all day, or enter the code. You can submit your questions to us. I'll get them here and then I can ask Kyle after he gives his presentation. So take it away.

Awesome. Hi, everyone. I will start to skip through here. I think it's fair. Yeah. All right. I'm here to talk about how to scale with usage based pricing. So I lead the growth practice at OpenView which is a venture capital firm investing in expansion stage software companies like data dog Calendly, Expensify user testing, and in the last handful of years usage based pricing has become really a hot topic in our portfolio. But it's something that's great in theory really hard to implement in practice. I'm going to talk about why you should consider a usage model for your business and how to scale once you have one in place. Just you know, for some audience participation, who has a usage bottle already raise your hand? Oh, good amount, good amount. All right, who's like thinking about it, experimenting with it? A few of you. Okay, and then the rest are either bored or just usage based curious. I'm fine either way. Well, whether you already have usage based pricing in place or thinking about it for your business, I'm going to talk about something that's something's going to be in it for you. Leave it at that. So let's see about how did we get here? We think back to the early days of buying software back in the 90s. Great fashion then, software was installed on premise, right? You bought it as a perpetual license. usage based pricing was certainly not a thing. And then cloud based software came along, but like the folks like Salesforce started charging on a subscription basis based on the number of seats that you bought, how many users needed to log into software. And today, we're starting to see a lot of changes in the way that people build and distribute products, right. We're in a more connected API first world where there might not be human users of software. End users are increasingly important constituents in software buying rather than just executives. folks expect to be able to start for free and they want to see value before they're they have to actually pay and product lead growth has become one of the biggest buzzwords you'll think we should think about is the kinds of innovations that folks are building today. And I'm sure many of you in this room can resonate with these more and more software products are helping with automation, AI or API. And none of these have have a model where the value of their product scales with having more human users logging in. And in fact, that might not be a signal that your product isn't working. It's a seat based subscriptions are increasingly broken in this current era, giving rise to usage based models in the past four years. We've seen the adoption of usage based pricing actually double and this is from open views, financial and operating benchmark survey of about 600 companies. By the end of this year, more than half of software companies say that they expect to have usage based pricing in place and that number will keep growing.