Startup Aims To Help Software Companies Shift To Usage-Based Pricing Models (techcrunch.com) 43
The startup Metronome "claims to have developed a billing and data infrastructure platform that is capable of 'reliably' processing data at scale so that usage-based companies can iterate on business models without code changes," reports TechCrunch. "It does this by providing businesses with real-time APIs for their customers' usage and billing data." From the report: Two former Dropbox employees -- Kevin Liu and Scott Woody -- who met at the company after selling their own respective startups founded Metronome in 2020. They came up with the concept after speaking with hundreds of companies that they say "shared the common pain of making usage-based billing work at scale." "This change we're seeing in the software market is mapped to the value of what a customer is getting out of the product," said Liu. "And that has all been accelerated by the market success of the likes of Twilio, Snowflake and AWS, who have proven just how successful those models can be."
Metronome claims that its offering allows companies to "quickly and effortlessly launch, iterate and scale new business models with billing infrastructure that works at any size and stage," according to Liu. The key, the company claims, is that companies are able to avoid designing around billing limitations. Customers include Cockroach Labs, Starburst and Truework. A16z General Partner Martin Casado believes that the entire software industry is moving toward "more granular and expressive pricing models, starting with usage-based pricing." "Building a system to support that is an incredibly difficult technical challenge," he told TechCrunch via email. "Kevin and Scott have the background and appreciation for the problem, and have built the only system that can support the scale, correctness, and uptimes required to handle billing for leading software companies." The company "has raised $30 million in a Series A round led by Andreessen Horowitz (a16z)," adds TechCrunch. "Presently, Metronome has 20 employees and plans to spend the bulk of its new capital toward hiring, particularly across its R&D and go to market teams."
Metronome claims that its offering allows companies to "quickly and effortlessly launch, iterate and scale new business models with billing infrastructure that works at any size and stage," according to Liu. The key, the company claims, is that companies are able to avoid designing around billing limitations. Customers include Cockroach Labs, Starburst and Truework. A16z General Partner Martin Casado believes that the entire software industry is moving toward "more granular and expressive pricing models, starting with usage-based pricing." "Building a system to support that is an incredibly difficult technical challenge," he told TechCrunch via email. "Kevin and Scott have the background and appreciation for the problem, and have built the only system that can support the scale, correctness, and uptimes required to handle billing for leading software companies." The company "has raised $30 million in a Series A round led by Andreessen Horowitz (a16z)," adds TechCrunch. "Presently, Metronome has 20 employees and plans to spend the bulk of its new capital toward hiring, particularly across its R&D and go to market teams."
So, just like IBM Mainframes? (Score:3)
So we came a full circle back to how IBM charge you for Mainframe usage, huh?
Yes, except: (Score:1)
This is INCREDIBLY AWESOME technology.
And don't you forget that.
But it'll be the same price-gauging, probably. Not by these guys, they're just the shovel-sellers. The MBA-logic that drives "usage-based billing" is no-capex, all-opex. Drawback is if you miss a payment your infrastructure you depend on to make money goes up in smoke.
I really do wonder what this will do to bankruptcy rates.
On the other hand, I'm happier every such announcement that I have a fairly strong FOSS background. Even if that isn
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Both models are in use. Some software is charged by CPU model (which is why IBM Z has hundreds of models with different performance, and 'engines' that will only run certain software), and some is charged by how often it is dispatched. Both models have been used for decades. But of course this is 'completely new'.
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Naw, mang. That sheet is OLD and BUSTED. This is all Web 3.0, cloud-based, synergy-driven, opportunity maximization! Totally buzzword compliant for improved visibility, capitalizing on hand-in-glove partnerships and revenue enhancements to drive the customer's bottom line.
(Drive it towards the red, of course, but that is not part of the marketing spiel.)
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Except that with IBM (and others) you bought the hardware but they only enabled the features you paid for. For some, it is cheaper to build something with all of the bells and whistles installed then to add them as needed (or later).
So the argument would be. If I bought the hardware why can't I use all of it? Answer: You can, just not with our software.
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Except that with IBM (and others) you bought the hardware but they only enabled the features you paid for. For some, it is cheaper to build something with all of the bells and whistles installed then to add them as needed (or later).
That's sometimes the case in the auto industry. BMW's, for example, come with a build order that codes into the software what features are enabled. That has lead to enthusiasts recoding the car to enable features not originally included. Some cars eben came with all the wiring, etc. needed to install bluetooth, so by adding some hardware and a coding change you could add it to a factory radio. I guess it was cheaper to make one wiring harness than try to ensure the right one got into the right car on th
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And copiers, and telephone service and gas/electric usage ... But "do it with a computer"
GACK
Pass (Score:5, Insightful)
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It's not subscription, that implies you pay a recurring fee for time based usage. This is charging per use.
I could actually benefit from this occasionally. For example, there is an app that checks the battery status of certain electric vehicles, very handy before buying a used one. There is a paid version with more detailed stats, but I'd rather just pay 1/10th the price to own it for the one or two times I'm going to use it.
It becomes an issue where there is no option to buy it outright, and per-use pricin
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I always want to think about subscription or use based software this way, too. Wow, I could get access to something not currently sold on this model that's too expensive to justify as a purchase because I don't use it enough.
Except it never seems to work that way. The minimum buy in is still more than you would use or want to spend. The development process skews towards more time consuming workflows or other gotcha situations that extend the metered operation.
If there is a way to save money using it, it'
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It's not subscription, that implies you pay a recurring fee for time based usage. This is charging per use.
I could actually benefit from this occasionally. For example, there is an app that checks the battery status of certain electric vehicles, very handy before buying a used one. There is a paid version with more detailed stats, but I'd rather just pay 1/10th the price to own it for the one or two times I'm going to use it.
It becomes an issue where there is no option to buy it outright, and per-use pricing is the only option.
I'm guessing that is teh end game, based on TFA:
“The billing system we’ve designed is equally capable of working with a bottoms-up, self-serve, go to market motion, as well as with a bespoke highly specific enterprise contract model,” Woody told TechCrunch. “And we’ve really tried to design Metronome to just service both use cases at the same time.”
The drugs pricing model? (Score:2)
This is charging per use.
Is the first one free? I think I've heard of this model. It's similar to a subscription once you're hooked.
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The trouble is the nickle and dimed aspect of it.
If I am corporate user op-ex is alright especially if its pay per user rather than sub per-month. Presumable you use corresponds to some variable activity you are getting paid for yourself. Maybe for example you are builder but you infrequently take interior remodel jobs during the slower winter months. There is some software tools for materials planning and cutting instruction generation for stone floors or something few customers order, its a great tool th
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Like most things its a balance, some people to include a library for the most trivial of things, and the library can be badly written as well. When including a library you need to weigh the pros and cons.
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It goes without saying that I as a consumer dislike subscription software, but looking at the big picture, I think it's about the only reasonably way forward.
1. For 'common' enough software, open source seems to fit the bill. There's little treason to use a commercial version of Winzip when 7zip is available for example.
2. For 'specialized' software, your development and maintenance costs are going to be large. You'll need a large development team. A large support team. You'll need to provide updates for ye
Paging Adobe... (Score:2)
$1 for every click with the airbrush. Unsharp Mask is gonna cost you $5.
This has privacy implications (Score:2)
Information about you is going to be uploaded. Quite what and how it is used you will not know. Some s/ware vendors will abuse this more than others.
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New vulnerability (Score:4, Interesting)
Let us all welcome a new vulnerability vector.
After the likes of SolarWinds...
Now add inside your "protected" corporate (or home, if you happen to do so) zone one more service.
And, as the flood attacks on Internet infrastructure reach higher and higher records, how long until your applications won't be available due to their seller's service being flooded?
Two points... (Score:3)
First, it cannot be "without code changes" if they are providing an API you have to call.
Second, subscription software - I don't get the hate. Some software projects work best that way, for example, if it is software that needs to be continually updated. The developers need to be paid for their work by *existing* customers. If you just sell optional annual support, a lot of customers will try to play stupid games, for example, trying to skip every other year of support.
There's another argument. I have an acquaintance whose company produces highly complex, highly specialized software, with a license fee in of 6-7 digits. Currently, this software is bought under license, and runs on a PC. Given the price tag, there is a huge incentive for people to crack the software and sell it at a fraction of the price. He spends more time on security efforts than on product development. i keep trying to persuade him to go SaaS. He could run the software on his own hardware and sell access. He would win - stress levels from finding the next cracked version go down. His customers would win, because his company could spend more time on the software, and less time fighting the cracks.
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Second, subscription software - I don't get the hate. Some software projects work best that way, for example, if it is software that needs to be continually updated. The developers need to be paid for their work by *existing* customers. If you just sell optional annual support, a lot of customers will try to play stupid games, for example, trying to skip every other year of support.
That's one way to look at it. Another is that they're trying to get paid for not doing their work. Because software does not fail [niquette.com]. So paying for updates is paying to fix broken software, and what does that say of the initial purchase price? The punters overpaid for a broken product!
There's another argument. I have an acquaintance whose company produces highly complex, highly specialized software, with a license fee in of 6-7 digits. Currently, this software is bought under license, and runs on a PC. Given the price tag, there is a huge incentive for people to crack the software and sell it at a fraction of the price. He spends more time on security efforts than on product development.
Dropping the price is not an option, of course. This is the same problem "big entertainment" faces in "developing" markets: Their insistence on having the punters pay western prices has given rise to a huge rip-off market. Movie
Authors Guild will fight Disney (Score:2)
And of course the "intellectual property" laws, that manage to extend their coverage each time the mouse threatens to become public domain.
That's not quite the case. There were two extensions whose proximity in time was unfortunate: the United States joining the Berne Convention with its "life of grandchildren" formula [copyrightalliance.org] in the mid-1970s and the European Union harmonizing its copyright term to account for later parenthood in the 1990s. Since then, in the late 2010s, the entertainment industry hasn't sought a third major extension, and even if they did, the Authors Guild is prepared to fight them on it [arstechnica.com].
But a critical reading suggests that, since he already spends more time on hunting cracks and developing new protections than developing the product, he could just scratch that effort and drop the price to less than half.
Unless even less than half the price would s
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Unless even less than half the price would still be high enough that users would look for cracks. Compare the warez scene and its zero-day rips of $20 mass-market DVD movies, which most customers in industrialized countries could still afford.
There will always be people that look for cracks, the trick is that you charge that most people won't crack your software, also DVDs are very inconvenient having a large collection takes a lot of space and you have to find the movie you want, even if you buy it is better to crack it an put it on your computer for easy storage and you don't have to sit through their advertising and copyright warnings. Look at the success of netflix most people don't copy any more. But at $8.99 (I think that's what it is in t
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Second, subscription software - I don't get the hate. Some software projects work best that way, for example, if it is software that needs to be continually updated. The developers need to be paid for their work by *existing* customers. If you just sell optional annual support, a lot of customers will try to play stupid games, for example, trying to skip every other year of support.
True, but as a customer you don't get to choose, things like MS word, have not provided any new features I would be willing to pay for (except reading their new file formats) for many years, but a subscription model forces you to pay them for work you did not want done in the first place. It changes the focus of the software developer from customer needs to just producing features, irrelevant of their usefulness. Seriously name 1 must have feature that a typical home user in word that wasn't there 20 years
How much do I owe? (Score:3)
They deserve a beating not funding (Score:2)
It's a billing service bureau (Score:2)
I still remember when MCI called a bill printed on different color paper a "new product"
I'm always suspicious of this kind of thing... (Score:3, Informative)
...because it rarely works out in favor of the customer.
It's sold as "It will make sure you only pay for what you use and in the long run saves you money" but then they start to nickel and dime you for just about everything.
Of course by the time you realize that, the subscription version is the only version you can get and are stuck paying more than what you were paying for your old license.
Whenever possible, I avoid subscription software for this very reason. When I can, I switch to a more cost-certain way of buying software.
Just my view.
Have a great day.
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For the business case, which pays for enterprise licensing, and probably a support service, a per-use fee won't make a big difference. But for a student or hobbyist, buying uncapped (single-user) software for $100-$200 is their only option for software with a good UI.
FOSS is getting there but it focuses on Linux. If you want to tweak your Windows user experience, or play gigabyte-sized games, FOSS is not the answer.
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I'd rather have this than the current flat subscription fee pricing schemes. There are a few apps or services I'd like to use, but I know I'd only use them a few times per year (e.g. Adobe Creative Cloud). Maybe a hybrid model would be better: pay $X for unlimited use or $Y/unit of usage until you reach $X.
All my business models (Score:2)
All my business models are iterated by infinite loops. So, sorry, I don't need your product.
You're welcome.
Stuck on the Free Tier (Score:2)
I'm presently stuck on the free ("limited commercial use") tier of my CAD package because my use of it fails to generate enough revenue to cover the minimum single-seat license, this despite my desire to support their ongoing product evolution. For me "Pay Per Use" would be equivalent to shorter and self-clocking licenses, where I could pass specific costs to a specific client. And to have that service for my clients cost me nothing when I'm not using it.
Only viewing/reviewing should need to be kept truly
Tell this to Netflix, Amazon Prime video, etc.... (Score:1)