Category: Consumption-Based Pricing

Usage-Based Pricing & Consumption Explained: How Product Usage Becomes Revenue — and Where It Fails

Posted on February 11, 2026 by Sean Joyce - Consumption-Based Pricing, Embedded Revenue Infrastructure, Salesforce Revenue Cloud, Usage-Based Pricing

A practical guide for revenue, finance, and product teams on how product usage data becomes contract-governed consumption and recognized revenue. Learn why usage-based pricing breaks at scale and how embedded revenue infrastructure keeps sales, finance, and customers aligned.

TL;DR

- In a usage-based pricing model, usage is raw product telemetry data (API calls, transactions, compute time); consumption is the portion of that usage that counts commercially under a contract.
- Usage shows customer behavior and adoption, but contract-governed consumption determines what can be billed and recognized as revenue.
- Most usage-based pricing models break at scale because there’s no consistent monetization layer translating product usage data into governed consumption across systems.
- Embedding monetization and revenue recognition logic into Salesforce Revenue Cloud and NetSuite ERP keeps product activity, contracts, billing, and revenue aligned as pricing evolves.

Introduction

Most companies say they have usage-based pricing. Far fewer can clearly explain how product usage data actually becomes contract governed-consumption, or how either reliably becomes billable and recognized revenue under ASC 606

That disconnect shows up quickly as companies grow. What starts as a pricing discussion becomes an operational problem, creating friction between Sales, Finance, RevOps, and ultimately customers.

This article slows things down on purpose. Not to debate pricing philosophy, but to explain the mechanics underneath it. Because until teams understand what usage and consumption really mean in practice, it is very hard to build a monetization model around them that works at scale.

What Is Usage in a Usage-Based Pricing Model?

In a usage-based pricing model, usage refers to raw product telemetry data — API calls, transactions, compute seconds, data processed, or other billable usage events. It reflects what a customer actually does with a product as they use it day to day.

That activity can take many forms. API calls, transactions processed, events triggered, messages sent, seats logged in, or records scanned are all common examples. Usage data comes from the product itself. It is operational, high volume, and often close to real time.

On its own, usage tells you how customers behave. It shows adoption, engagement, and where value is being created from the customer’s point of view. What usage does not tell you is how much of that activity should count commercially.

What Is Consumption in Consumption-Based Billing and How Is It Different From Usage?

Consumption is contract-governed usage that has been evaluated against pricing rules, entitlements, credits, and contractual commitments. In other words, consumption is value realized under the terms you sold. It represents what a customer uses up based on the commercial agreement. Credits drawn down, commitments depleted, entitlements consumed, or balances reduced in a prepaid wallet all fall into this category.

Where usage describes activity, consumption defines accountability. It determines what can be billed, what revenue can be recognized, and what finance can stand behind with confidence.

Usage answers what happened. Consumption answers what counts.

Why Is Translating Product Usage Data Into Billable Consumption So Difficult?

Usage and consumption are related, but nothing automatically connects them. Something has to decide whether an event is billable, which contract it belongs to, how it draws down value, and how it ultimately shows up for finance.

That translation happens in what we sometimes refer to as the usage mediation and rating layer within the quote-to-cash architecture. This is where raw product activity is mediated, aggregated, rated, and evaluated against contracts, pricing rules, credits, commitments, and prepaid value to determine governed consumption.

Most companies collect usage successfully, but struggle at this step. Activity is captured, but not governed consistently. Mediation, aggregation, rating, and contract-governed consumption tracking are fragmented across product systems, billing tools, and finance workflows.

The value is being delivered. The revenue exists in theory. The breakdown happens in the translation between raw activity and consumption finance can trust.

Why Do Usage and Consumption Models Get Harder to Manage as Companies Scale?

Early on, usage models feel manageable. Volumes are lower. Pricing is simpler. Manual checks still work.

As companies grow, pricing becomes more flexible. Hybrid subscription and usage-based pricing models emerge, combining recurring subscription fees with metered overage billing. Prepaid credits, overages, ramps, true ups, and multi year commitments become normal.

At that point, a different question matters more. Is the architecture built to translate usage into consumption continuously, or only at the end of the month?

Most quote to cash systems were designed for static pricing. They were not built to constantly mediate between product activity and financial outcomes. As complexity increases, the distance between usage data and financial systems grows, unless it’s addressed directly.

What Breaks in Salesforce and NetSuite When Usage and Consumption Are Not Aligned?

When monetization and billing logic sits outside Salesforce Revenue Cloud and NetSuite ERP, each team ends up working from a different version of reality.

Sales cannot see which customers are expanding through usage. Customer Success misses early signals of renewal risk or growth opportunity. Finance relies on spreadsheets to reconcile invoices. Customers struggle to understand what they have used and why they are being charged.

Teams often try to fix this with tools. The problem is that the logic itself is in the wrong place.

How Does Embedded Revenue Infrastructure Enable Seamless Usage, Consumption, and Revenue?

Solving this problem doesn’t mean replacing your billing system. Most companies already have one. What’s missing is a governed calculation layer that controls how usage is translated into consumption and makes existing billing and finance systems more powerful.

Embedded Revenue Infrastructure applies monetization and revenue recognition rules directly within Salesforce quoting, contracts, and renewals, and within the usage processing flow itself. Rules governing what is billable, how credits and commitments are tracked, and how consumption aligns to contracts are enforced as usage is mediated, rated, and converted into governed consumption so billing and finance outcomes flow cleanly into NetSuite without being reconstructed later.

When this logic is embedded, activity becomes consumption in real time and flows directly into billing and revenue. Sales, Finance, and Customer Success operate from the same numbers, without downstream reconciliation.

This is what allows usage, consumption, and revenue to stay aligned as pricing models evolve.

How Do You Know If Your Usage-Based Pricing and Consumption Model Is Ready to Scale?

Before expanding a usage or consumption based strategy, teams should pause and be honest about how things work today.

Do you clearly distinguish between usage as activity and consumption as value? Do your SKUs and entitlements reflect how customers actually experience that value? How does usage become billable consumption, and where is that logic enforced? Can Finance trust the numbers without manual reconciliation? Can Sales and Customer Success see consumption trends inside Salesforce?

If those answers are unclear, the pricing strategy itself may be sound. The execution is likely not ready yet.

How Do Salesforce CPQ EOS and RCA/ARM Change the Way Usage and Consumption Must Be Operationalized?

Salesforce’s move to end sales of CPQ and accelerate investment in Revenue Cloud Advanced, now Agentforce Revenue Management, reflects a broader shift in how quote-to-cash is expected to work.

RCA and ARM make it possible to sell usage-based and consumption-based pricing models natively inside Salesforce Revenue Cloud Advanced (RCA) and Agentforce Revenue Management (ARM).. They do not, by themselves, solve how usage data is mediated, rated, governed, and translated into financial outcomes at scale.

For many organizations, CPQ EOS raises a practical question. How do we operationalize usage and consumption today without rebuilding everything while the platform is still evolving?

This is where architecture matters more than product choice. Whether extending CPQ in the near term or moving toward RCA and ARM, teams need a consistent monetization layer that translates usage into consumption and consumption into revenue across systems.

Still have questions about usage- and consumption-based models? These are the ones we hear most often from revenue and finance teams scaling usage-based monetization.

Frequently Asked Questions

What’s the difference between usage and consumption?

In a usage-based pricing model, usage is raw product telemetry data such as API calls, transactions processed, or compute time consumed — what customers do inside your product. Consumption is the portion of that activity that counts commercially under a contract. It reflects how usage draws down entitlements, credits, or commitments and ultimately determines what can be billed and recognized as revenue.

Why isn’t usage data enough for billing and revenue recognition?

Usage data alone is not sufficient for billing or GAAP-compliant revenue recognition because it has not yet been evaluated against contract terms, entitlements, and pricing rules. It doesn’t determine whether an event is billable, which contract it belongs to, or how it affects credits, commitments, or revenue schedules. Without a governed translation layer, finance teams must reconcile usage back to contracts manually.

Where do usage-based models usually break down?

Most breakdowns happen between product telemetry and financial systems. Usage is captured correctly, but the logic that maps activity to SKUs, entitlements, and revenue lives outside core systems — often in spreadsheets, custom code, or disconnected billing tools.

How does consumption affect sales and customer success teams?

Consumption provides real-time insight into how customers are realizing value. When consumption data is visible in Salesforce, sales teams can spot expansion opportunities earlier, and customer success teams can identify renewal risk before it’s too late.

Do we need a standalone billing system to support usage-based pricing?

Not necessarily. Standalone billing systems often create new silos and reconciliation challenges. An embedded revenue infrastructure approach keeps monetization logic inside Salesforce and NetSuite, where sales and finance already operate.

Ready to Turn Product Usage Into Trusted Revenue?

See how Continuous embeds monetization and revenue recognition logic directly into your quote-to-cash architecture, without adding billing silos or manual reconciliation.
👉 Request a demo

Reclaim Your Roadmap: Why In-House Usage Rating & Billing Logic Might Be Stalling Product Innovation

Posted on July 17, 2025 by Sean Joyce - Consumption-Based Pricing

Sean Joyce

For product, engineering, and RevOps teams, this article explains why in-house usage rating and billing logic becomes a drag on innovation, and how offloading operational complexity helps teams scale faster.

TL;DR
- Building custom usage rating and billing logic offers early control but creates growing maintenance and complexity as pricing evolves.
- Engineers get pulled into finance rules, edge cases, and compliance work that slows feature delivery.
- Embedding revenue logic inside product code introduces performance risk, fragile integrations, and technical debt.
- Offloading usage rating and billing into revenue infrastructure frees engineers to focus on core product innovation.

Intro

Customers choose your product for the value your features deliver—not for the billing engine under the hood. While building usage rating and billing logic can initially offer control and flexibility, as complexity grows and new pricing models are introduced, engineering teams often find themselves burdened by ongoing maintenance of credit logic and billing rules.

After all, who knows your usage better than you? It seems logical to leverage that insight internally, especially when usage data also supports analytics, operations, and customer insights.

But what often starts as a well-intentioned and logical choice to maintain control can, as your business scales and product offerings evolve, introduce hidden complexity. Prepaid credits, tiered pricing, and sophisticated overage rules can turn initial flexibility into a significant drain on engineering time, focus, and resources, pulling them away from the innovations that truly set your product apart.

Tuning Your Custom Usage Rating and Billing Engine

For companies who’ve already invested in in-house rating and billing, the goal isn’t always a full rip-and-replace. It’s about optimizing your investment and strategically shifting additional complexity from your core product so you can scale more easily, move faster, and free engineers to build the capabilities that differentiate you.

Even well-built, custom usage rating and billing logic often encounters increasing friction as businesses scale and innovate:

Expertise Shortfall: Accurate usage-rating, billing, and revenue recognition rely on nuanced finance rules, tax regulations, and compliance standards. As new tiers or credit models emerge, keeping up with edge cases (proration, true-ups, audit trails) can become a specialist’s job, not a feature team’s.
On-Going Maintenance: Every pricing tweak—new discount tier, updated overage rate, expired credit pool—translates into code changes and QA cycles. That steady upkeep can quietly consume cycles meant for customer-facing innovation.
Fragile Integrations: Custom connections to Salesforce, NetSuite, or your own analytics stack can break when data models or schemas shift—leading to mismatches that require urgent fixes.
Performance Degradation: Running core revenue logic inside your application can introduce additional CPU, I/O, or network calls—potentially adding latency to user transactions and affecting overall system responsiveness, impacting the very experience your product aims to deliver.
Growing Technical Debt: Quick-win patches for one-off pricing or usage rules often become permanent fixtures. Over time, those patches form a web of interdependencies that slows every release, making your codebase harder to manage and evolve.
Roadmap Slowdown: When usage and billing logic is deeply embedded in your product, every update carries the risk of unintended side effects on rating or billing. This can significantly drag down feature velocity and delay crucial product roadmap items.
Audit & Compliance Overhead: Ensuring every transaction and revenue event is auditable and compliant with financial regulations (like SOX) requires complex logging and reconciliation, pulling engineers into non-feature work.

The good news? For many, the path forward isn’t necessarily a full rip-and-replace of existing systems. Instead, it’s about strategically offloading the operational complexities that slow you down, allowing you to optimize your current investment while reclaiming valuable engineering cycles.

Unlock Agility with Embedded Revenue Infrastructure

Instead of grappling with operational complexity in your product, shift it into a specialized layer that seamlessly plugs into the tools your teams already use. Embedded Revenue Infrastructure empowers you to:

Centralize metering and rating in a purpose-built service, keeping complex usage rating and billing logic out of your product code
Configure pricing models via UI, empowering non-technical teams to add or tweak usage tiers, prepaid credits, and rate plans without a single line of code.
Surface real-time usage insights directly in Salesforce, eliminating manual exports, custom integrations, and the delays of spreadsheet gymnastics.
Automate credit burn and revenue events through APIs, moving beyond manual scripts and batch jobs to ensure accuracy and efficiency.
Free engineers to focus on shipping features that truly propel your product forward and delight customers.

By strategically moving this logic out of your product codebase, you accelerate feature delivery, scale reliably, and eliminate the hidden costs of managing homegrown billing and rating.

Modern usage rating, billing, and overage management should always accelerate product velocity, not stall it. When facing complex pricing models—like prepaid credits, hybrid plans, or multi-phase commitments—the critical question for Product and Engineering leadership becomes: What logic is truly strategic to our core product, and what is operational infrastructure that pulls engineers away from building differentiating features? Your engineers need to focus on delivering that core innovation, not patching metering pipelines or maintaining invoicing scripts.

Ready to reclaim engineering time and scale without revenue headaches?

Schedule a personalized demo today and see exactly how Continuous transforms your capabilities, enhances data consistency, and delivers immediate value.

Make Every Day a Selling Event: Unlock Expansion Revenue with Usage & Prepaid Metrics

Posted on June 18, 2025 by Sean Joyce - Consumption-Based Pricing

Sean Joyce

For sales and RevOps teams, this article explains how usage and prepaid metrics act as daily selling signals, and how surfacing them in Salesforce helps drive expansion revenue and retention.

TL;DR
- Customers signal buying intent every day through usage spikes, credit burn, and feature adoption.
- When usage and prepaid data live outside Salesforce, reps miss expansion and renewal opportunities.
- Usage and credit metrics form a hidden expansion pipeline, not just health indicators.
- Surfacing these signals directly in Salesforce helps reps act earlier and capture more revenue.

Intro: How many upsells slipped through because your reps never saw the signal? As prepaid usage models become the SaaS standard, that blind spot costs quota and growth.

Every day, customers signal buying intent through usage spikes, burned-down credits, and feature engagement. But if your reps can’t see those signals, they can’t act. And that’s revenue left on the table.

Reps Can’t Sell What They Can’t See

Sales teams live in Salesforce, but usage and prepaid credit data usually doesn’t. It’s scattered across billing systems, siloed in finance-owned spreadsheets, or buried in your product, far from where selling happens.

Without visibility:

Reps miss the exact moment to expand or renew
Deals become harder to land, renewals get riskier, and churn risk rises
Customers get blindsided by surprise overages, eroding trust

When sales can’t see the signals, growth stalls.
Reps chase new logos while existing customers go untapped. Acquisition costs rise. Forecasts get shaky. And what should be low-effort expansions turn into missed quarters.

Usage & Prepaid Metrics Are Your Expansion Pipeline

Your next wave of pipeline isn’t in marketing leads—it’s hiding in product activity and prepaid consumption. Every usage spike or credit drawdown is a trigger for upsell. Every under-utilized plan is a retention warning.

Key signals include:

Usage spikes or growth trends signaling immediate need.
Low credit balances approaching zero, indicating an upsell window before overages occur.
Balances nearing expiration on prepaid commitments—prime time for renewal or upsell conversations.
Feature adoption patterns that hint at cross-sell opportunities.

These aren’t just health metrics, they’re daily, high-value selling signals.

Continuous Puts the Signals Where Sales Works

What if every buying signal showed up in Salesforce as it happens—usage spikes, low credit balances, looming expirations, and under-utilized features?
No external reports. No manual data hunts. Just timely, high-value signals delivered where reps already work.

Continuous brings usage and credit data into Salesforce with no extra systems and no added steps. Just the signals that matter into the tools you already use so sales teams can stop reacting and start anticipating.

Ready to See What Your Reps Are Missing?

Get a free Revenue Operations Assessment from our team. We’ll identify the biggest revenue signals hiding in your usage and prepaid data—and show you how to surface them in Salesforce, where your reps already work.

No cost, no commitment. Just insights. Request yours now, and one of our experts will reach out.

Medallia Partners with Continuous to Streamline Usage Models on Salesforce, Driving Growth and Customer Satisfaction

Posted on April 8, 2025 by Sean Joyce - Client Stories, Consumption-Based Pricing

Sean Joyce

For RevOps, Finance, and Product leaders supporting usage-based pricing, this case study shows how Medallia partnered with Continuous to manage credits, streamline consumption models, and scale monetization on Salesforce Revenue Cloud and NetSuite.

TL;DR
- Medallia needed to support consumption and credit-based pricing without heavy Salesforce customization.
- Salesforce Revenue Cloud handled subscriptions, but usage and credit balance management were missing.
- Continuous delivered embedded usage rating and credit management directly on Salesforce.
- The result: better customer experience, real-time visibility for sales and finance, and scalable growth.

Medallia, the leading software company in the customer experience industry, faced a challenge supporting consumption models for their commercial business unit. In particular, they needed a solution to complement their existing technology stack of Salesforce Revenue Cloud and NetSuite Financials. Although Revenue Cloud solved the core use cases of SaaS subscription products, supporting usage models, specifically credit balance management, was proving to be challenging. Customizing Salesforce would add costs, increase maintenance costs and limit Medallia’s ability to rapidly bring additional business units and pricing models onto the platform, which could hinder growth.

The Challenge: Consumption & Credit Balance Concerns

Medallia understood the critical role that credits played in customer growth and satisfaction, but they needed to ensure that financials were tracked accurately across the product-to-revenue lifecycle. Credits provide flexibility for customers to better allocate spend, but their dynamic nature makes them uniquely challenging to support. To address this challenge, Salesforce recommended that Medallia work with Continuous, a leading Salesforce partner focused on launching and growing usage and consumption models. The Continuous solution is purpose-built to support consumption and credit balance management models and was an ideal partner for Medallia’s needs. Specifically, Continuous provides best-in-class credit purchase, monitoring, application, and re-up capabilities all on the Salesforce platform, with no customization required.

The Solution: Seamless Usage Rating & Credit Balance Management

Continuous collaborated with the Medallia team to implement usage rating and credit balance management with seamless integration to the Medallia product portal enabling omni-channel customer experiences. Since going live in November 2022, the partnership has grown with the migration of additional business units and the implementation of new usage automation and amendment capabilities onto the platform.

“The Continuous product connects seamlessly into our Salesforce Revenue Cloud solution and makes it easy for customers to manage their credit balance while also providing real-time usage and purchase visibility to our sales and finance teams,” said Deepa Hiriyanna, Director, Enterprise Operations at Medallia.

Results & Impact: Improved UX, Scalable Growth

As a result of this successful partnership, Medallia solved its challenge and achieved its goal of supporting consumption models on the Salesforce platform. Medallia customers can now purchase and manage credits and have those credits applied to both software and services. The joint Salesforce and Continuous solution is designed to support the future growth of any monetization model across all sales channels, including assisted sales and self-service. Medallia looks forward to further partnering with Continuous to support its growth and expansion. By standardizing on the Salesforce Revenue Cloud platform and Continuous, Medallia was able to go live with a platform optimized for future growth and expansion.

“The Continuous team is a strategic partner and their customer service is excellent,” said Kofi Frimpong, Vice President of Enterprise Solutions at Medallia. “Their unsurpassed experience in consumption models combined with a product that works directly with Salesforce enabled a rapid go live and allowed us to deliver customer innovation on time and on budget.”

With Continuous, Medallia successfully transformed its approach to supporting consumption models — enhancing customer flexibility, streamlining credit balance management, and ensuring seamless integration with Salesforce Revenue Cloud. This collaboration has not only optimized Medallia’s operations but also positioned the company for scalable growth across new business units and monetization models. As Medallia continues to expand, Continuous remains a key partner in driving efficiency, customer satisfaction, and long-term success.

Talk to an Expert

Looking to optimize your revenue operations with Salesforce Revenue Cloud Advanced? Connect with our consumption-based pricing experts to learn how we can help you unlock the full potential of usage-based and hybrid pricing models.

Rethinking the Recurring Billing Status Quo: Why Analyst Reports Highlight a Broken Market

Posted on September 12, 2024 by Sean Joyce - Consumption-Based Pricing

Sean Joyce

Analyst reports from Gartner and Forrester expose a deeper issue in recurring billing. This article is for RevOps, Finance, and IT leaders evaluating billing platforms who want to understand why standalone billing systems create complexity, and what a better model looks like.

TL;DR
- Analyst reports reveal a recurring billing market built around standalone billing systems.
- These platforms attempt to own sales, billing, and finance workflows that already belong in CRM and ERP.
- The result is fragmented data, costly integrations, and rigid architectures that slow change.
- Recurring billing works best when embedded directly into systems like Salesforce and NetSuite.
- Continuous challenges the standalone billing model by extending CRM and ERP instead of replacing them.

On August 6, 2024, Gartner released their latest “Magic Quadrant for Recurring Billing Applications“ followed by Forrester’s “The Recurring Billing Solutions Landscape, Q3 2024“ on September 3, 2024. These reports assess a competitive landscape that has been evolving for over a decade, evaluating vendors based on their ability to manage the entire sales-to-finance process for recurring billing.

While these reports are valuable, they also reveal a deeper problem in the industry—a problem rooted in how standalone billing systems approach the recurring billing challenge. At Continuous, we believe the way the market has evolved has fundamentally misunderstood the nature of the recurring billing problem, making it difficult for analysts to cover accurately and even more painful for customers to select the right solutions.

Both the Gartner and Forrester reports rank vendors based on their ability to handle the entire recurring billing lifecycle, which includes tasks such as:

Sales Process and Quoting:
Creating flexible pricing models and accurate quotes within the sales cycle, ensuring they align seamlessly with both CRM and billing systems.

Contracting:
Managing the transition from quoting to contracts, including drafting, signing, and handling amendments or renewals, while integrating pricing and terms from the sales process.

Service Provisioning:
Setting up and activating services according to contract terms, tracking usage in real-time to ensure accurate billing.

Usage Data Collection and Rating:
Capturing, mediating, and rating usage data in real-time, applying pricing rules to ensure accurate and scalable billing for consumption-based models.

Billing and Invoice Generation:
Consolidating one time, periodic and usage charges into detailed invoices, ensuring timely delivery to customers via their preferred channels.

Payment Processing:
Facilitating payment collection, managing recurring payments, and ensuring accurate reconciliation with financial systems.

Revenue Recognition and Financial Reporting:
Ensuring compliance with accounting standards by accurately recognizing revenue and providing detailed financial reports that integrate with the ERP system.

These tasks encompass a wide range of functions traditionally handled by CRM (Sales) and ERP (Finance) platforms. However, over the past decade, specialized billing vendors have emerged to address gaps in these systems. Their solution? Introduce a “billing system of record” – a third platform that sits between CRM and ERP to manage these critical processes. This shift has created a new category of software, one that analysts like Gartner, Forrester, IDC, and others are now tasked with evaluating.

The Rise of Standalone Billing Systems: A New Category Emerges

Around 2010, a belief took hold that CRM and ERP vendors couldn’t handle the increasing complexity of billing as companies shifted from traditional perpetual license models to subscription billing models. In response, a range of specialized billing systems began emerging, offering solutions to support this new “Subscription Economy”.

By 2017, this new category of standalone billing systems had matured enough to receive formal analyst coverage, leading to the release of reports like the Gartner Magic Quadrant and Forrester Wave. These vendors promised to simplify recurring billing by offering a third-party solution that could manage the billing lifecycle independently. This trend accelerated as consumption and prepaid credit models gained popularity, leading to the crowded market landscape we see today.

But here’s the issue: billing is not, and never should be, a standalone process. It’s intertwined with sales, finance, and customer management. When billing is siloed into a separate platform, businesses are forced to build complex integrations, juggle multiple systems, and deal with costly maintenance—problems that CRM and ERP systems were originally designed to solve.

What These Reports Reveal: Complexity, Not Simplicity

The criteria used by Gartner and Forrester to evaluate vendors include tasks that traditionally belong within the domains of CRM and ERP systems. However, instead of enhancing these core systems, standalone billing vendors have introduced an unnecessary third layer of complexity.

Consider the following:

Quote Creation and Negotiation are native functions of CRM systems, where sales teams manage customer interactions and quote data from all channels should be stored.
Contract Drafting and Management should flow naturally from CRM to ERP, enabling seamless financial reporting.
Invoice Creation and Payment Processing are core functions of billing that should reside within the ERP or CRM system, where financial and sales data is already managed.

By positioning a third-party billing system as essential, standalone vendors have shifted what should be natural extensions of CRM and ERP into fragmented processes. This fragmentation forces businesses to build complex integrations, making it harder to achieve a seamless sales-to-finance workflow.

The Problem with Standalone Billing Systems

At Continuous, we believe the current approach taken by standalone billing vendors is fundamentally flawed. Instead of simplifying processes, these vendors create friction by placing themselves as overlapping solutions with the CRM and ERP systems they are also dependent on. This introduces costly, cumbersome integrations that are difficult to maintain—particularly as pricing and packaging models evolve.

There’s no inherent reason why traditional sales and financial processes should be managed by a separate system when sales and finance teams have already invested in systems like Salesforce and NetSuite. Standalone billing vendors want businesses to believe they must control these processes, but the reality is that doing so makes their systems “stickier” by requiring complex customizations and significant services investments. The end result for customers of these vendors are deployments that are:

Expensive to integrate: Building and maintaining integrations between CRM, ERP, and standalone billing systems often requires costly services and custom work.
Rigid and limiting: Once integrations are built, they become rigid, making it difficult for businesses to adapt to new pricing models or market changes without extensive rework.
Manual and error-prone: Despite these integrations, many billing processes still require manual intervention, leading to inefficiencies and potential errors in financial reporting and customer invoicing.

This is why the current market is so difficult for analysts to cover: the premise of a standalone billing system is inherently flawed. The criteria that Gartner and Forrester use to evaluate these vendors encompass functions that should naturally belong in core CRM and ERP systems. However, standalone vendors pull these critical processes into a third cloud, which struggles to work effectively alongside CRM or ERP solutions.

The Continuous Approach: Back to Common Sense

At Continuous, we challenge this status quo. We believe that the best way to solve the recurring billing problem is to go back to what was previously common sense: there should not be a third cloud in between CRM and ERP.

Instead, we advocate for enhancing the core applications that B2B companies already rely on—CRM for sales and ERP for finance—and supplementing them with a powerful calculation engine that integrates with customers’ internal platforms. By doing this, we enable a truly unified quote-to-consumption process that is:

Easier to maintain.
More flexible as pricing and packaging needs evolve.
Less expensive to deploy, reducing both software license and integration costs.

Conclusion: Challenging the Status Quo

The release of the Gartner Magic Quadrant and Forrester Wave reports highlights how deeply entrenched the idea of standalone billing systems has become. But as businesses increasingly adopt complex pricing models and usage-based billing, the limitations of these systems become more apparent.

At Continuous, we believe there’s a better way—one that embeds billing awareness directly into the tools businesses use every day, rather than introducing another layer of complexity. By rethinking how billing should work, we can simplify the process for businesses and create a more efficient, flexible future for recurring billing.

Ready to simplify your sales and finance processes?

Stop juggling fragmented systems and costly integrations. At Continuous, we unify your sales and finance workflows by building on the trusted CRM and ERP platforms you already use.

If you’re ready to move beyond the limitations of standalone billing systems, let’s talk. Explore how Continuous can streamline your quote-to-cash process and help your business scale with confidence. Find out more today at: Product | Continuous Technologies.

Consumption Based Pricing across Industries

Posted on March 16, 2023 by Sean Joyce - Consumption-Based Pricing

Sean Joyce

This article is for product, pricing, and revenue leaders exploring usage-based pricing. It breaks down how consumption-based pricing works across SaaS, cloud, telecom, energy, and transportation—and why it’s driving flexibility and innovation.

TL;DR
- Consumption-based pricing charges customers based on actual usage, not fixed fees.
- Cloud and SaaS industries pioneered the model to improve scalability and cost control.
- Telecom, energy, and transportation use consumption pricing to increase flexibility and efficiency.
- Usage-based models align pricing more closely with customer value.
- Adoption across industries continues to accelerate as flexibility becomes table stakes.

Consumption-based pricing is a pricing model that charges customers based on the amount of resources or services they consume, rather than a flat fee or subscription model. This pricing model has been adopted by various industries as a way to drive innovation, improve customer experience and provide greater flexibility for both customers and businesses. In this blog post, we will explore how different industries are innovating using consumption-based pricing.

Cloud Computing Industry

The cloud computing industry has been a pioneer in adopting consumption-based pricing. With cloud computing, businesses can purchase computing resources on-demand, without the need to invest in costly hardware and infrastructure. Consumption-based pricing allows businesses to pay only for the computing resources they use, rather than paying for a fixed capacity upfront.

This has enabled businesses of all sizes to leverage the benefits of cloud computing, including scalability, flexibility, and cost-effectiveness. Consumption-based pricing has also enabled cloud service providers to compete on price and offer more personalized and targeted pricing models to their customers.

Telecommunications Industry

The telecommunications industry has also embraced consumption-based pricing as a way to offer flexible pricing models to customers. Traditional pricing models in the telecommunications industry are typically based on fixed subscription plans, with customers paying a fixed fee for a set amount of data, minutes or texts.

Consumption-based pricing in the telecommunications industry allows customers to pay only for the data, minutes or texts they use, rather than paying for a fixed amount upfront. This provides greater flexibility for customers and allows them to tailor their plans to their usage patterns.

Software as a Service (SaaS) Industry

The SaaS industry has been another early adopter of consumption-based pricing. With SaaS, businesses can access software applications and services over the internet, rather than investing in costly on-premise software and hardware.

Consumption-based pricing in the SaaS industry allows businesses to pay only for the software and services they use, rather than paying for a fixed subscription upfront. This provides greater flexibility for businesses and allows them to scale their usage up or down as needed.

Energy Industry

The energy industry is also exploring consumption-based pricing as a way to incentivize energy efficiency and reduce energy consumption. Traditional pricing models in the energy industry are typically based on fixed rates, with customers paying a fixed fee for a set amount of energy.

Consumption-based pricing in the energy industry allows customers to pay only for the energy they use, rather than paying a fixed fee upfront. This provides an incentive for customers to reduce their energy consumption and adopt more energy-efficient practices.

Transportation Industry

The transportation industry is also adopting consumption-based pricing as a way to provide greater flexibility and convenience for customers. Traditional pricing models in the transportation industry are typically based on fixed fares, with customers paying a fixed fee for a set distance or time.

Consumption-based pricing in the transportation industry allows customers to pay only for the distance or time they travel, rather than paying a fixed fee upfront. This provides greater flexibility for customers and allows them to tailor their transportation needs to their specific usage patterns.

Conclusion

Consumption-based pricing is a powerful tool for driving innovation and improving customer experience in various industries. By providing greater flexibility and incentivizing efficiency, consumption-based pricing enables businesses to better align their pricing models with customer needs and preferences. As more industries adopt consumption-based pricing, we can expect to see further innovation and new opportunities for businesses and customers alike.