Tiered pricing is a subscription billing model which offers several plans at a fixed price. Here’s how tiered pricing works and how to use it for your SaaS business.

What is tiered pricing?

A tiered pricing structure is a subscription billing model which offers several different price points. These plans, or “tiers,” are typically separated by features, number of users, or product usage. The first or most basic tier is usually offered at a lower price point and only includes basic features and functionality. In a tiered pricing model, by offering your product/service at a scaling rate, you increase the likelihood that potential customers will subscribe. From there, you can focus your efforts on upselling your customer base over time.

The tiered pricing model also acts as a competitive alternative to both fixed and value-based pricing models. A set price is easy to understand and appeals to customers looking for a plug-and-play solution. This model works best with software that isn’t overly complex. On the other hand, value-based pricing charges customers for specific product and feature usage, leading to highly complex pricing scenarios.

On a sliding scale from simple to complicated, the tiered pricing model sits right in the middle. 

Benefits of tiered pricing in SaaS

Many SaaS companies use a tiered pricing model, and with good reason. The tiered pricing strategy works well for many SaaS companies. Here are four of the biggest advantages of offering different pricing tiers:

1. It attracts a wider customer base

Honing in on specific customer needs across various user types is one of the most essential elements of building a successful business. Different levels of pricing properly cater to various customer personas and their needs. A one-man startup needs fewer bells and whistles, while a full-blown team needs more advanced functionality. Offering a range of prices to meet each customer where they’re at is a great strategy for appealing to potential new customers. 

2. Encourages upsells to higher pricing plans

Multiple pricing options give the users room to grow over time. While a customer may opt for a lower tier in the beginning, they may require different features as their business grows. When they’re ready, tiered pricing allows users to easily upgrade to the second-tier or higher level options to access the functionality their business needs. 

3. Maximizes customer retention and revenue potential

Should times get tight for your users and business owners feel the need to start cutting costs, subscription services are often easier to cut down on than personnel or utility costs. In this instance, offering different tiers gives users the option to downgrade based on their needs without needing to look elsewhere for a new solution. These choices decrease the odds of customers having to create a new solution, or worse, moving to a competitor. 

On the other hand, when business is good, tiered pricing motivates users to upgrade to the next tier to save money. For example, volume discounts available on a higher tier give more users access and typically offer a wider variety of different features. 

4. Eases revenue and cashflow predictions

Once a SaaS company starts building its customer base, it can more accurately forecast its revenue. Since customers don’t have to leave if they grow rapidly (because they can move up a tier) or hit an obstacle that temporarily sets them back (because they can go down a tier), financial predictions become more accurate. 

How is tiered pricing calculated?

There’s not much differentiation between the pricing of each individual tier and any other product or service. 

First, you must calculate how much a product takes to develop and maintain. Second, add a small percentage markup to determine your price range. Third, you should also account for pricing changes that will occur as your company scales and overhead increases. Conducting regular pricing experiments and reiterating your pricing strategy once every 1-2 years ensures that you’re capturing the full value of your SaaS while planning for changing market conditions.

Adjust each pricing tier for the features and functionality they offer. To start, calculate the pricing of your most advanced or premium tier. This plan usually includes the greatest access to product features, functionality, and customer support, such as 1:1 onboarding assistance, etc. 

Once the most expensive plan has been calculated, work backward until you reach the “basic” plan. This tier is also commonly referred to as “entry-level” pricing because it’s where most customers will start with your product. 

Tiered pricing vs. volume-based pricing

Tiered pricing and volume-based pricing don’t share much in common. With volume-based pricing, when specific unit volume thresholds are reached, the price per unit goes down. In other words, the more you buy, the less you pay per unit. 

For example, let’s say a SaaS provider is selling cloud storage space. In a tiered pricing model, for the first 50 TB a month, space costs 15 cents per GB, but after 50 TB, the price for each additional GB drops to 12 cents. In contrast, with a volume pricing model, if you purchase up to 50 TB a month, you pay 15 cents per GB. If you purchase more than that, you pay 12 cents for all GB, including the first 50 TB of GB.

Common variations in tiered pricing models

Tiered pricing lets companies offer plans that meet different customer needs. Most models include at least two tiers, but the number of tiers and how they’re structured can vary widely.

How many tiers to offer

2-tier pricing

A two-tier pricing model includes just two plan options. This setup keeps things simple and clear—customers choose between a basic option and a more advanced one. It can work well for smaller SaaS companies or products with clear feature splits.

3-tier pricing

A 3-tier pricing model offers three plan levels that typically progress from a low-cost option to a more premium package. These are often labeled following a Good, Better, Best type pattern, such as Basic, Standard, and Premium plans, where the more expensive tiers provide access to more features and/or support options. This structure helps guide customers toward a plan that fits their needs without overwhelming them.

Multiple-tier pricing

Multiple-tier pricing includes more than three pricing levels. This is common for companies with a wide range of customers, from small businesses to large enterprises. Each tier is built with a different set of limits or features, helping customers find a plan that matches their size, goals, or budget.

What to base your tiers on

Usage-based tiers

These tiers depend on how much of the service a customer uses. Metrics might include emails sent, API calls made, or data stored. As usage increases, customers move into higher-priced tiers that reflect the added value they’re getting from the product. This model is especially useful for SaaS businesses with variable customer needs, allowing users to start small and scale naturally.

Feature-based tiers

Feature-based pricing is built around the tools or functionality available at each tier. Lower tiers usually include core features, while higher tiers unlock advanced functionality and a higher level of service. This approach helps users avoid paying for extras they don’t need and gives them a reason to move to a plan with a higher price as their business grows.

User count tiers

These tiers are based on how many users need access to the service. The more users a company needs to onboard, the higher the tier they’ll fall into. This model works well for tools designed for collaboration, like project management software or team platforms.

Tiered pricing examples from well-known businesses

Sometimes it’s easier to understand a concept by looking at real-world examples of it. So let’s put the spotlight on some popular businesses that use different types of tiered pricing. 

Zendesk

Zendesk uses a three-tiered pricing model that centers on product features. Zendesk’s non-enterprise tiers for smaller businesses currently include:

• A Team level for $49 per agent per month billed annually
• A Growth level for $79 per agent per month
• A Professional level for $99 per agent per month

Crazy Egg

Website optimization tool Crazy Egg uses a multiple-tier pricing model.

• A Basic level for $29 per month
• A Standard level for $49 per month 
• A Plus level for $99 per month
• A Pro level for $249 per month
• An Enterprise level with pricing based on customer needs

It’s important to note that Crazyegg’s enterprise plan is specifically built to cater to customers whose needs far exceed the functionality and support of a pre-built tier. Offering an enterprise tier allows them to negotiate their pricing and foster stronger customer relationships with larger accounts that require 1:1 support.

Mailchimp 

Email marketing automation company Mailchimp sets their tiers up based on usage. 

• A Free level that gives a user 1000 email sends per month
• An Essentials level for $13 per month (which includes 5,000 email sends)
• A Standard level for $20 per month (including 6,000 email sends)
• An Enterprise level that starts at $350 per month and includes up to 150,000 monthly email sends

Canva

Canva is a design website that helps everyone create professional-looking marketing material. Its pricing tier structure is both user-count and feature-based.

• Canva Free provides users with a short list of great features that help them design all types of professional marketing collateral
• Canva Pro, at 12.99 per month for one person, adds more features to a user’s disposal, such as more access to Pro templates and storage. 
• Canva for Teams, at $14.99 per month and including up to five users, is the highest tier and adds features to help businesses scale like brand controls, design approval workflows, and more AI-powered design tools

Microsoft 365 Business

Companies of all sizes across all industries use Microsoft 365 to improve organization and productivity. Its tiered pricing is user-based, but also provides several additional features as the tiers climb higher.

• Microsoft 365 Business Basic costs $6 per user, per month
• Microsoft 365 Business Standard costs $12.50 per user, per month
• Microsoft 365 Business Premium costs $22 per user, per month
• Microsoft 365 Apps for Business costs $8.25 per user, per month

How to set your tiered pricing strategy

While there are many exciting advantages of using tiered pricing, it can be challenging to implement. Add to that how critical it is to use the right one, and it becomes a hugely important decision. 

This decision can be made easier by gathering three essential elements that provide insight into how to structure your pricing for optimal performance. 

Develop tiers with customer personas in mind

Organizations can’t arbitrarily build pricing tiers without taking their customers into account. They should think about their ideal customer profile (ICP) and pinpoint:

• The industries they’re in
• What size they are
• What their priorities are
• What their pain points are
• Who makes the final decision
• How much their budgets will support

Taking the time to pull this data together gives companies a deeper understanding of their target market and what they will look at as reasonable pricing. Having this information on hand makes it easier to implement pricing that will make the company a profit and that customers will find palatable. 

Clearly distinguish differences between tiers

While it’s smart to have consistency in every tier, make sure you’re clearly differentiating one tier from the next, again with your ICP in mind. You need to have a solution that meets the needs and price point of as many potential customers as possible. When browsing your pricing tiers, customers should be able to quickly see what they will receive with each level, along with the unique value proposition each plan offers.

Price your tiers carefully

Like anything else, be sure to consider the normal elements when pricing your subscription tiers, like the cost of goods sold. Be sure to also consider what your competitors are pricing their tiers at, as your potential users will likely be looking at competitors’ rates while considering yours. Finally, take what you know about your customer and figure out the perceived value of your product from their point of view.

The stakes are high in figuring out a workable pricing structure. Set the price even a bit too high, and the company may lose out on conversions that would have helped it grow. Further, future coupons or price reductions may be seen as devaluing the brand. Set the price too low, and you lose out on valuable revenue per customer and will have an uphill battle in slowly raising prices so as not to upset existing customers. The moral of this story: Be sure to very carefully consider all aspects surrounding your pricing strategy, possibly testing them out with test users, before launching.

Metrics for SaaS tiered pricing

Like any other pricing model, tiered pricing needs to be tracked and analyzed to ensure it’s profitable and meets your customers’ needs. For tiered pricing, expansion and upgrade MRR should be your performance benchmark.

Why? Because they align with the strategy behind a tiered pricing model, which focuses on getting users to pay more overtime via upgrades, add-ons, and upselling. In other words, it’s all about monetization.

Measuring the additional MRR generated through feature add-ons and pricing plan upgrades gives SaaS companies a quick snapshot of how well their pricing tiers are performing. For example, if you see a positive correlation between revenue and acquisition but not between revenue and monetization, this is a clear sign that one of two things are happening:

1. Users are receiving too much value from your basic plan and don’t need to upgrade
2. Users aren’t receiving enough value from your basic plan and don’t want to upgrade

Both of these problems are easy to identify within a tiered pricing model if you’re tracking revenue increases via expansions and pricing plan upgrades. 

Build your perfect pricing model with Maxio

Maxio lets you customize your billing to find that perfect balance between what you and your customer need. Deploy a range of billing models—including both tiered and volume-based pricing—and mix-and-match as you need to create the pricing model for your business. Request a demo to see how you can turn your billing into a competitive advantage.

If you work in SaaS finance, your role is about a lot more than just closing the books. Today’s finance leaders are responsible for crafting the narrative behind the numbers—explaining not only what happened, but why it happened. And when a board meeting, investor call, or audit is around the corner, you need those answers fast.

That’s why drill-down reporting isn’t a “nice-to-have.” It’s an essential capability for any high-performing SaaS finance team. The ability to move from a top-level metric to the underlying contract, transaction, or journal entry in a few clicks gives you unmatched clarity, auditability, and control.

So if you’re still buried in spreadsheets and juggling static reports, it might be time to rethink your reporting stack.

The Problem: Disconnected Systems and Manual Workarounds

For most finance teams, reporting still feels like assembling a jigsaw puzzle with half the pieces missing. ARR reports are rebuilt every month. Sub-ledgers live with outsourced bookkeepers. Deferred revenue schedules are stored in error-prone Excel files that only one person truly understands. And when leadership asks, “Why did revenue drop this month?” the answer isn’t at your fingertips—it’s buried across tools and spreadsheets.

Here’s what that looks like in practice:

• Finance spends days manually pulling and validating data from multiple systems.
  
• Critical business questions take too long to answer—or go unanswered entirely.
  
• Metric definitions vary across teams (if they’re defined at all).
  
• Audit prep turns into a fire drill instead of a formality.
  

Without true drill-down capabilities, you’re left reacting instead of leading. You can’t move fast, and worse—you can’t be confident in your numbers.

What Is Drill-Down Reporting?

Drill-down reporting is the ability to trace high-level metrics back to their source data—quickly, clearly, and confidently. It bridges the gap between surface-level reports and the granular financial reality driving your SaaS business.

With drill-down reporting, you’re no longer stuck asking:

• Where did this number come from?
  
• How is this ARR trend composed?
  
• What caused the increase in churn?
  
• Which customer contracts are behind this deferred revenue movement?
  

Instead, you can follow a direct path from the metric to the data behind it.

It’s not just about numbers. It’s about visibility. It’s about telling a story with confidence—whether you’re answering to your CEO, your board, or your investors.

Why Drill-Down Reporting Matters in SaaS

SaaS finance is uniquely complex. You’re not just tracking cash in and out—you’re managing subscriptions, revenue recognition, customer cohorts, and ever-changing contracts. Without drill-down visibility, you’re forced to reconcile multiple sources of truth, often under pressure.

Drill-down reporting solves this by:

• Connecting metrics like MRR or churn to specific customer actions.
  
• Making audit prep dramatically faster and easier.
  
• Aligning cross-functional teams on a shared, reliable view of the data.
  
• Empowering finance leaders to provide proactive, strategic insights—not just historical summaries.
  

Imagine being asked in a meeting why net retention dropped by 3%—and having the answer in seconds. Drill-down reporting makes that possible.

How Maxio Powers Drill-Down Reporting for SaaS Finance

At Maxio, we’ve built drill-down reporting specifically for the needs of SaaS companies. Here’s how it works:

1. Trace Revenue Back to the Source

Maxio connects the dots between customers, product lines, invoices, and transactions. Want to understand February’s recognized revenue? Click on the figure and you’ll see the exact line items and contracts that generated it.

2. Get Audit-Ready Without the Stress

Revenue recognition schedules are automatically generated and fully traceable. When auditors ask for evidence, you’re just a few clicks away from the complete story—no scrambling required.

3. Ditch the Fragile Spreadsheets

Deferred revenue schedules no longer need to live in hidden Excel tabs. Maxio makes them visible, dynamic, and easy to reconcile. Plus, you can instantly see how contract changes impact your books and your forecasts.

4. Trust the Metrics You Report

Maxio’s Subscription Momentum report shows you what’s happening—and why. You’ll always know how your SaaS metrics (ARR, CAC, churn, LTV, etc.) are defined and what’s driving the changes. No more guesswork.

5. Give Each Team the Visibility They Need

With customizable dashboards, every stakeholder—from finance to sales to leadership—can track the metrics that matter to them. Sales can view ARR by rep. Finance can analyze expansion by cohort. Everyone’s on the same page.

Finance Needs More Than Snapshots—It Needs a Story

It’s no longer enough to report on the past. SaaS finance teams are expected to shape the future of the business, guiding strategy through data. But you can’t do that with disconnected tools and delayed answers.

Drill-down reporting gives you the full picture—the ability to investigate, explain, and influence. It turns reporting from a reactive chore into a strategic advantage. If you’re ready to stop fighting spreadsheets and start owning your metrics, Maxio can help. Book a demo and see how drill-down reporting can change the way you work—for good.

Why Usage-Based Pricing Gives SaaS Companies an Edge

In today’s saturated SaaS market, differentiation is critical. Pricing strategies can determine whether a company thrives or struggles to retain customers. Usage-based pricing (UBP) has emerged as a powerful way for SaaS businesses to gain a competitive advantage. By offering a flexible, scalable pricing model, companies can attract a wider customer base, drive greater adoption, and optimize revenue growth.

UBP is more than just an alternative pricing model—it’s a strategic differentiator. Companies that implement it successfully not only stand out but also increase customer retention and long-term profitability. Let’s explore how UBP enhances pricing agility and positions SaaS businesses ahead of their competition.

How UBP Creates a Competitive Advantage

Differentiation in Pricing Strategy

Traditional subscription-based pricing models can create barriers to entry, particularly for small businesses hesitant to commit to high upfront costs. UBP removes these barriers by allowing customers to pay for what they use, making services more accessible across a broad customer spectrum.

SaaS companies leveraging UBP can position themselves as customer-centric providers, offering tailored solutions that meet the needs of startups, SMBs, and enterprise clients alike. This level of accessibility provides a distinct advantage over competitors who rely solely on rigid pricing structures.

Better Market Fit and Expanded Customer Base

A one-size-fits-all pricing model often alienates potential customers. Different businesses have different needs—some require minimal access, while others demand enterprise-scale functionality. UBP ensures that pricing aligns with usage, making it appealing to a diverse range of customers.

By adopting a flexible pricing structure, SaaS companies can:

• Attract startups and small businesses with low-cost entry points.
• Provide enterprise clients with scalable solutions that grow alongside their needs.
• Support high-growth businesses seeking adaptable pricing models that evolve with their usage patterns.

Stronger Customer Relationships and Retention

UBP fosters trust and long-term engagement by ensuring customers pay only for the value they receive. When customers feel they are being billed fairly, they are more likely to remain loyal and continue expanding their usage.

Additionally, UBP reduces the risk of churn by allowing customers to scale their engagement based on evolving needs. Instead of seeking alternative solutions, they can simply adjust their usage, making them more likely to stay with the provider long term.

Increased Revenue Potential and Profitability

One of the most compelling aspects of UBP is its ability to drive organic revenue growth. Unlike rigid pricing tiers that may cap customer spending, UBP enables natural expansion—customers who find value in a product increase their usage, leading to incremental revenue gains.

This model also eliminates the friction associated with forced plan upgrades. Instead of pushing customers toward higher-cost tiers, businesses can let usage scale naturally, ensuring that increased spending feels seamless and justified.

The Role of Pricing Agility in Competitive Markets

In fast-changing SaaS markets, pricing agility is essential. UBP provides the flexibility companies need to adapt to evolving customer demands and economic conditions.

Responding to Market Trends

SaaS companies can use UBP to test different pricing structures and adjust based on customer feedback and usage trends. This ability to pivot quickly ensures businesses remain competitive and aligned with market expectations.

Customizing Enterprise Agreements

Larger clients often require tailored pricing structures. UBP allows SaaS companies to offer custom agreements based on actual usage, making it easier to close high-value enterprise deals.

Adapting to Economic Fluctuations

During economic downturns, businesses often cut costs, leading to higher churn in rigid subscription models. UBP enables customers to scale back temporarily rather than cancel altogether, preserving customer relationships and maintaining revenue continuity.

Addressing Common UBP Challenges

Managing Revenue Predictability

UBP introduces variability in revenue streams, but hybrid models—combining base subscriptions with usage-based components—help balance stability with scalability.

Educating Customers on UBP Pricing

Transparent billing is essential to ensuring customer trust. Businesses should provide:

• Clear, easy-to-read invoices detailing usage-based charges.
• Self-service dashboards to help customers track their spending.
• Proactive notifications to prevent unexpected charges.

Continuous Pricing Optimization

To remain competitive, SaaS companies must refine their pricing based on real-time usage data. Regular adjustments ensure they capture optimal revenue while continuing to meet customer expectations.

Gain a Competitive Edge with UBP

Usage-based pricing isn’t just a pricing model—it’s a strategic advantage that enables SaaS companies to attract more customers, increase retention, and drive scalable revenue growth.

How Maxio Supports Competitive UBP Strategies

Maxio provides the tools SaaS companies need to implement UBP effectively, including:

• Real-time usage tracking: Gain insights into customer behavior and spending patterns.
• Flexible billing automation: Ensure seamless and accurate invoicing.
• Customizable pricing models: Support tiered, volume-based, and hybrid structures.
• Predictive analytics: Leverage data-driven insights to optimize pricing and revenue strategies.

Want to refine your UBP strategy? Download Maxio’s, Adopting Usage-Based Pricing in SaaS: A Practical Guide for expert insights and best practices.

Looking for a seamless way to implement usage-based pricing? Request a demo of Maxio today to see how our platform can optimize your revenue and pricing model.

As SaaS offerings grow more complex, pricing is no longer just about covering costs—it’s about communicating value, earning customer trust, and unlocking growth. But here’s the problem: most billing models haven’t kept up with the complexity of modern SaaS offerings.

As product capabilities evolve—especially with the rise of AI and data-intensive workflows—rigid, one-size-fits-all pricing strategies are starting to break down. And when pricing doesn’t align with product value or usage, it becomes a source of friction instead of a growth driver.

That’s why your billing strategy isn’t just operational—it’s strategic.

Billing’s Direct Impact on Growth

When pricing is misaligned, the consequences ripple across the business:

• Customers feel overcharged and churn
  
• High-value features go under-monetized
  
• Engineering teams waste cycles maintaining brittle pricing logic
  
• Expansion becomes harder because pricing doesn’t scale with usage
  

Flat-rate subscriptions may offer predictability, but they often fail to reflect the real cost—and real value—of dynamic software offerings. That disconnect erodes margins and makes it difficult to grow with customers over time.

On the other hand, usage-based pricing models can offer more flexibility, but only if they accurately reflect the true nature of product usage.

Why Adaptive Billing Is the Evolution SaaS Needs

The next generation of SaaS billing isn’t just about measuring more—it’s about measuring smarter.

Adaptive billing introduces a multi-dimensional approach to usage tracking. Rather than assigning a flat cost per transaction, adaptive billing differentiates between types of usage based on factors like resource intensity, complexity, and value delivered.

For example, a simple API call and a GPU-intensive AI query shouldn’t cost the same—nor should they be priced using the same logic. Adaptive billing recognizes this and allows pricing to reflect the real economic impact of each user action.

In doing so, it empowers SaaS companies to:

• Monetize premium or complex features more effectively
  
• Provide more transparent, fair pricing for customers
  
• Align revenue with operational costs
  
• Reduce margin risk when usage spikes unexpectedly
  

In short, adaptive billing evolves your pricing model alongside your product—and your customers.

Why Traditional Billing Models Fall Short

Many SaaS companies struggle to iterate on pricing not because they lack ideas, but because their billing infrastructure can’t support change.

Legacy systems—and even some modern platforms—lack the flexibility to implement multi-dimensional metering or real-time tracking. And for companies relying on homegrown solutions, any pricing change often means a backlog of engineering work and increased risk of errors.

As a result, product teams hesitate to experiment with pricing, even when customer behavior or cost structures shift. That hesitation can lead to stagnation and missed opportunities for revenue expansion.

Smarter Billing Starts with the Right Infrastructure

Forward-thinking SaaS companies are solving this by investing in real-time metering platforms that decouple pricing logic from engineering workflows. This creates the freedom to iterate without fear—and without rewriting your billing system every time you launch a new feature or pricing model.

Maxio Metering is purpose-built for this shift. It enables:

• Real-time, multi-dimensional metering that tracks distinct usage events (e.g., data processing, API calls, AI inference jobs)
  
• Separation of metering and billing logic, so pricing changes don’t require code changes
  
• Predictive analytics and real-time reporting, giving finance and product leaders the insights they need to optimize pricing and forecast revenue
  
• Integration with your existing stack, reducing developer overhead and enabling faster GTM cycles
  

Instead of cobbling together a patchwork of tools, Maxio gives SaaS companies a single platform to capture, interpret, and monetize product usage—with the clarity and control needed to turn billing into a strategic advantage.

Pricing Innovation Is Product Innovation

Billing has traditionally been treated as an afterthought—a necessary backend function rather than a core component of the customer experience. But in a market defined by constant innovation and unpredictable usage patterns, billing is no longer just about collecting payments.

It’s about:

• Communicating value clearly and transparently
  
• Capturing revenue in line with product costs
  
• Building trust through fair, flexible pricing
  
• Enabling faster product and pricing experimentation
  

SaaS providers who embrace adaptive billing position themselves to win not just on features, but on fairness and agility. And with customer expectations rising—especially in AI-driven products—those that fail to modernize their billing risk falling behind.

Turn Your Billing Into a Competitive Advantage

As the SaaS industry matures and usage patterns grow more complex, the ability to adapt pricing in real time isn’t just a nice-to-have—it’s a strategic imperative. Ready to make billing a true growth lever? Download the white paper, The Future of SaaS Revenue: Adaptive Usage-Based Billing, to learn how adaptive billing is reshaping the future of SaaS revenue–and how your company can stay ahead of the curve.

The Hidden Complexity of AI-Powered SaaS Pricing

AI-powered SaaS products are revolutionizing industries, offering unprecedented efficiency, automation, and insights. However, these innovations come with a challenge—unpredictable workloads, fluctuating resource demands, and high-cost computational processes. Despite this complexity, many SaaS companies still rely on traditional billing models that fail to reflect the true cost and value of AI-driven services.

As AI capabilities expand, so too does the variance in usage patterns. Some customers may use simple AI features, while others engage in resource-intensive model training or real-time inferencing that requires significant computational power. Without a billing system that adapts to these fluctuations, SaaS companies risk misaligned pricing that either undercharges high-cost users or overcharges low-intensity customers. The solution lies in a more flexible approach—adaptive billing.

The Pricing Challenge for AI SaaS

Unlike traditional software, AI-driven services don’t operate within predictable usage patterns. Workload intensity can vary widely based on factors such as:

• Compute-intensive model training: Running deep learning models requires GPU-heavy processing that can skyrocket infrastructure costs.
• On-demand inferencing: AI-powered analytics or automation tools may generate fluctuating demand, making it difficult to predict and allocate resources.
• Variable API consumption: AI services often operate in high-volume environments, with millions of requests requiring vastly different levels of processing power.

Flat subscriptions or basic usage-based pricing models fail to accommodate this variability. A one-size-fits-all approach either penalizes light users by charging them too much or fails to cover costs for customers with high-computation needs. This misalignment can lead to revenue leakage, dissatisfied customers, and an inability to scale profitably.

How Adaptive Billing Solves This Problem

Adaptive billing provides a solution by implementing multi-dimensional metering that tracks multiple factors in real time, ensuring that pricing aligns with actual resource consumption. Unlike conventional usage-based billing, which simply counts API calls or gigabytes transferred, adaptive billing differentiates between the types of usage and their underlying costs.

With adaptive billing, AI SaaS companies can:

• Track compute-heavy workloads separately from lightweight usage, ensuring that pricing reflects actual operational costs.
• Introduce event-based billing models that charge users based on the complexity and intensity of their AI-powered actions.
• Dynamically adjust pricing based on real-time demand, ensuring profitability even as usage patterns shift.

By aligning costs with consumption, adaptive billing creates a more sustainable and transparent pricing model that fosters customer trust while maximizing revenue potential.

Evolving Billing Strategies for AI-Driven SaaS

Many forward-thinking SaaS companies are shifting toward event-based, tokenized, and adaptive billing models to better capture the intricacies of AI-driven workloads. These approaches allow providers to charge based on the specific actions taken within their platforms, rather than relying on outdated, linear pricing structures.

For example:

• Tokenized billing: Some AI SaaS platforms assign tokens to different levels of service usage, ensuring that complex, high-resource actions carry a higher price than simple requests.
• Event-based pricing: Companies can charge per AI model inference, per dataset processed, or per real-time recommendation delivered, rather than using broad-based metering.
• Adaptive pricing tiers: By dynamically adjusting costs based on usage spikes or efficiency gains, companies can offer customers fairer pricing while protecting their margins.

Considering Metering Solutions

Implementing adaptive billing at scale requires the right infrastructure. Solutions like Maxio Metering enable SaaS businesses to:

• Capture real-time data on resource consumption.
• Implement multi-dimensional metering that accounts for different workload intensities.
• Provide transparent, customer-friendly billing that aligns price with actual value.

With Maxio Metering, AI SaaS companies can ensure that high-value computational events are accurately tracked and reflected in pricing—without constant manual adjustments from engineering and finance teams.

AI SaaS Billing Must Evolve Alongside the Product

As AI-powered SaaS companies continue to push technological boundaries, they must also evolve their billing strategies. Traditional pricing models simply don’t work in a world where workloads vary in complexity and computational cost. A modern AI SaaS company needs a billing system that adapts—one that tracks usage complexity, aligns pricing with cost-to-serve, and supports long-term scalability. To learn more about how adaptive billing is reshaping SaaS pricing strategies, download the white paper, The Future of SaaS Revenue: Adaptive Usage-Based Billing.

Why Usage-Based Pricing is a Revenue Game-Changer

Pricing isn’t just about covering costs—it’s a strategic tool to encourage customer expansion while making them feel in control. Usage-based pricing (UBP) removes barriers to adoption and encourages natural expansion. By allowing customers to pay for what they use, rather than committing to rigid subscription plans, UBP creates a seamless path to higher spending and predictable revenue growth.

How UBP Drives Revenue Expansion

Encourages Organic Upsells

Unlike fixed subscription tiers, UBP fosters natural upsell opportunities. Customers who see value in a product continue increasing their usage, leading to organic revenue growth. This eliminates the need for sales-heavy upsell motions and allows businesses to scale more efficiently.

When costs align directly with value received, customers feel confident in expanding their investment. Instead of being forced into pre-set pricing tiers that may not fit their needs, they can scale spending based on actual demand—resulting in higher spend without resistance.

Reduces Purchase Friction

Many SaaS buyers hesitate to commit to high-cost subscriptions without first experiencing a product’s full value. UBP removes this friction by enabling customers to start small and increase usage at their own pace. This flexibility results in a smoother sales process and higher adoption rates.

Companies leveraging UBP often find that prospects who might hesitate to sign a long-term contract feel more confident when they can pay based on their actual needs. This lowers the initial financial commitment and removes psychological resistance to purchase.

Increases Customer Lifetime Value (LTV)

Retention and expansion drive LTV, and UBP supports both. Customers who feel in control of their spending stay engaged longer and continue increasing their usage over time.

In a traditional subscription model, customers often reassess whether they’re getting enough value for their investment, leading to potential cancellations. With UBP, as long as the service continues delivering value, customers remain engaged and grow their investment naturally. This makes UBP a powerful tool for maximizing customer lifetime value.

Creates Predictable Revenue Streams

While traditional subscription models provide stability, they lack flexibility. UBP balances adaptability with financial predictability by enabling companies to analyze customer usage trends and accurately forecast revenue.

With the right analytics in place, SaaS companies can track usage patterns and project future revenue with confidence. This ensures revenue growth remains predictable while allowing customers to scale their usage in a way that aligns with their needs.

Best Practices for Optimizing UBP Revenue Strategy

Provide Transparent Billing & Usage Insights

Billing transparency is key to customer trust in a UBP model. To ensure clarity:

• Offer itemized invoices that detail usage-based charges.
• Provide real-time dashboards so customers can track their spending.
• Send proactive alerts to prevent billing surprises and improve customer satisfaction.

Automate Billing & Revenue Management

Manually managing UBP is inefficient and prone to errors. Instead, SaaS companies should:

• Use automated billing systems that support variable pricing.
• Leverage predictive analytics to forecast revenue trends.
• Streamline invoicing and reporting to maintain accuracy and transparency.

Real-World Success: UBP in Action

Consider a SaaS company offering cloud storage solutions. Initially, it relied on fixed-tier pricing, but customers with fluctuating storage needs either overpaid or left for more flexible competitors. By introducing a pay-as-you-go model, customers could scale their usage up or down based on real-time needs.

The results? Higher retention, increased spending by power users, and a significant drop in churn. Customers who started with minimal usage eventually expanded their spend over time, proving the revenue-boosting power of UBP.

Addressing Common UBP Challenges

Managing Revenue Predictability

UBP can introduce revenue fluctuations, but hybrid models—combining base subscriptions with usage-based fees—help stabilize cash flow while preserving flexibility.

Educating Customers on UBP Pricing

Customers unfamiliar with UBP may struggle to understand their charges. Businesses should prioritize:

• Clear pricing communication from the outset.
• Transparent, easy-to-read invoices.
• Proactive notifications to keep customers informed about usage and costs.

Continuous Pricing Optimization

SaaS companies must continuously refine their pricing models based on usage data to remain competitive. Regular adjustments ensure they capture optimal revenue while delivering value to customers.

Unlock the Full Potential of UBP

Usage-based pricing isn’t just about fairness—it’s a strategic revenue accelerator. Companies implementing UBP effectively can drive higher spending, improve retention, and create more predictable revenue streams.

Want to refine your UBP strategy and maximize revenue growth? Download Maxio’s Adopting Usage-Based Pricing in SaaS: A Practical Guide, for expert insights and actionable best practices.

From Idea to Innovation—How Maxio Metering Came to Life

In March, Maxio launched Maxio Metering—a real-time usage billing solution built to help SaaS companies turn every customer interaction into monetized revenue. Designed to eliminate engineering bottlenecks, support complex pricing models, and scale with ease, Maxio Metering was the result of deep cross-functional collaboration across Product, Engineering, and Product Marketing.

As part of the team behind the launch, Product Manager Grant Chambers helped shape everything from technical requirements to go-to-market messaging. In this Q&A, Grant shares his perspective on what makes Maxio Metering different, why it’s needed in today’s SaaS market, and how it’s helping finance and engineering teams work smarter—not harder—when it comes to usage-based billing.

Q&A: A Closer Look at the Product, the Process, and the Impact

Can you introduce yourself and your role at Maxio? How have you contributed to bringing Maxio Metering to life?

My name is Grant Chambers, and I’ve been on the Product team at Maxio for the past four and a half years, with a focus on our Advanced Billing module and billing capabilities. I’m passionate about unlocking enterprise value with creating billing models, automating subscription billing, and diving into the nuance of complex workflows.

As the Product Manager for Maxio Metering, I helped define the engineering requirements, collaborated with our product marketing team to sharpen our value proposition, and worked closely with Design and Engineering to stress test our implementation decisions. It’s been incredibly rewarding to help bring such a powerful solution to life.

What problem does Maxio Metering solve, and why is it needed in today’s SaaS landscape?

The SaaS industry is shifting rapidly toward usage-based pricing models. We’re seeing more companies—many of whom never considered usage-based pricing before—either making the switch now or planning to in the near future. Why? Because usage-based pricing drives real revenue upside. It’s how you turn value delivered into value captured. When customers use more of your product, your revenue should grow accordingly—and that’s exactly what usage-based pricing enables when done right.

Maxio Metering gives companies a flexible, powerful way to implement billing that aligns perfectly with this model. It simplifies the complexity of usage-based billing while enabling businesses to scale without compromise.

How does Maxio Metering differ from traditional usage-based billing solutions?

Traditional solutions require engineering teams to do heavy lifting to aggregate usage data —  establishing operational data stores, setting up ETL processes, and orchestrating cron jobs to send data over ‘just in time’ for billing. It’s tedious to implement and difficult to maintain an inherently brittle backend system.

With Maxio Metering, all of that changes. Instead of sending pre-aggregated data, you simply send real-time user actions—what we call “events”—as they happen. One snippet of code embedded in your application triggers these events, and Maxio takes it from there. We handle the aggregation, the complexity, and the scale. It’s a massive simplification of what used to be a painful process.

How does Maxio Metering handle real-time event ingestion and processing at scale?

This is where Maxio Metering really shines. Since we’re working with raw event data—no pre-aggregation—we’re ingesting billions of events per month, often thousands per second. That kind of scale demands a purpose-built, high-throughput event ingestion API.

We’ve built exactly that, leveraging years of experience—including deep expertise originating from Chargify’s acquisition of Keen in 2020, a company specialized in event streaming technology. Real-time data ingestion is in our DNA, and Maxio Metering reflects that expertise.

What are the key technical components required to integrate Maxio Metering into an existing SaaS stack?

Integration is surprisingly simple. Like traditional usage-based billing, you’re still just making API calls—but now, the code lives directly inside your application instead of a back-end cron job pulling from a data warehouse.

This small shift makes a huge difference. By moving the usage aggregation burden to Maxio, you eliminate the need for data warehouses, ETL, and periodic jobs. Your data strategy gets dramatically simpler, and your team saves a ton of engineering hours.

How does Maxio Metering ensure billing accuracy and prevent revenue leakage?

Revenue leakage usually stems from overly complex IT processes—more steps mean more chances for something to break. Traditional billing setups often include five or more steps between a user action and the billing system, which introduces real risk.

With Maxio Metering, that process is reduced to just two steps: your app triggers an event when a user takes an action, and Maxio receives the API call. That’s it. Fewer steps mean fewer failure points—and ultimately, tighter alignment between usage and billing. It’s a smarter way to ensure accuracy and prevent revenue from slipping through the cracks.

How does Maxio Metering scale to support high-volume SaaS businesses?

Maxio Metering was built with scale in mind. You don’t have to worry about API rate limits or infrastructure strain as your customer base grows. Whether you’re a fast-scaling startup or a large-scale enterprise switching to usage-based pricing, Maxio Metering takes the heavy lifting off your plate.

Scaling real-time billing infrastructure is a serious challenge—and it’s one we’ve already solved. When you use Maxio Metering, you’re plugging into a battle-tested system that’s designed to grow with you.

What are some considerations to be aware of when implementing Maxio Metering?

One of the biggest challenges companies face is keeping up with pricing changes driven by Finance or GTM teams. Maxio Metering is built to make your implementation future-proof.

First, you can create multiple Meters for a single Stream, letting you measure the same events in different ways without reconfiguring your data. Second, you can send us any number of event attributes—whether or not you’re currently using them for pricing—which means changes to your pricing model don’t require changes to your code. Third, you can embed code for various user actions throughout your app and use flags to turn on those event streams as needed. So if your unit of measure changes, all it takes is flipping a switch—not rewriting code.

It’s flexibility by design, which means fewer headaches for your dev team down the line.

What are some of the most innovative pricing models you’ve seen customers implement with Maxio Metering?

We’ve seen some incredibly smart pricing strategies built on Maxio Metering. One standout is the use of multi-attribute pricing, where customers segment pricing by up to four different attributes. This allows for incredibly granular pricing that closely aligns with the value being delivered. Some companies are running dozens of pricing segments to fine-tune that value alignment—the level of detail some customers get to with their pricing is remarkable!

Another powerful model is combining usage-based pricing with Term Subscriptions. This hybrid approach gives you the upside of variable revenue while also providing downside protection via a term commitment. It’s a great way to maximize revenue predictability without sacrificing flexibility.

The Future of SaaS Billing Starts Here

Maxio Metering reflects what’s possible when product, engineering, and go-to-market teams align around a shared vision: to give SaaS businesses a smarter, more scalable way to turn usage into revenue. With real-time event ingestion, adaptive pricing flexibility, and minimal engineering lift, it’s built to support modern billing at any scale.

Want to explore how Maxio Metering could work for your business? Let’s talk. This is just the beginning.

In SaaS, pricing and billing aren’t just financial operations—they’re a form of communication. They shape how customers perceive value, how vendors recover costs, and ultimately, how both sides build long-term relationships. But that conversation is broken.

Too often, SaaS companies rely on billing models that don’t match how value is delivered. The result? Misalignment, unpredictable margins, and customers who feel like they’re overpaying—or worse, who churn altogether.

That’s why many SaaS leaders are exploring a new path: adaptive billing.

Billing Is Communication—and Right Now, It’s Misfiring

Flat-rate pricing and per-seat subscriptions were good enough in the early days of SaaS. They were easy to explain, predictable to budget for, and simple to manage operationally.

But “simple” isn’t always “fair.” When one customer barely touches the product and another consumes massive resources—yet both pay the same price—you’re not aligning cost with value. That’s not just bad for margins. It sends the wrong message.

AI and the New Economics of SaaS

The urgency around billing innovation isn’t theoretical. The rise of AI-first companies and compute-heavy workflows has exposed the cracks in traditional billing structures.

For example, when generative AI capabilities trigger unpredictable usage patterns or token consumption, the cost of delivering value can far exceed a fixed subscription price. That misalignment leads to margin compression and confusion.

As SaaS products become more complex, so do the cost structures behind them. Vendors need pricing models that reflect these nuances. Customers deserve clarity on what they’re paying for and why.

Enter Adaptive Billing

Adaptive billing is more than a trend—it’s the natural evolution of usage-based pricing.

Instead of batching usage data and applying a static rate, adaptive billing enables:

• Real-time usage tracking: Capture event-level data as it happens.
  
• Multi-dimensional metering: Measure usage across different units (tokens, storage, compute, etc.).
  
• Dynamic pricing: Apply variable rates based on resource intensity or service type.
  
• Continuous feedback loops: Help customers optimize usage—and help vendors optimize monetization.
  

The result? A more transparent, responsive, and fair relationship between buyer and seller.

Maxio Metering makes adaptive billing possible. This metered billing solution lets you track event-level usage data, apply flexible pricing models, and support hybrid billing strategies—all without overhauling your entire system. Get a demo to see how it works.

Not Just for AI: Who Needs Adaptive Billing?

Adaptive billing is essential for AI-native companies, but its relevance goes far beyond that.

If your customers:

• Vary widely in how they use your product
  
• Need flexibility but fear unpredictable overages
  
• Want billing that reflects value, not just access…
  

…then adaptive billing is worth exploring.

Whether you’re building a workflow automation tool, a data platform, or a hybrid SaaS service, the ability to align cost with usage—at a granular level—can unlock better margins and longer customer lifecycles.

It’s Not a Set-It-and-Forget-It World Anymore

One of the biggest lessons we’ve learned at Maxio: Your billing model is a living system. It should evolve alongside your product, your customers, and your strategy.

Here’s a practical path forward:

1. Audit your current billing approach. Is it aligned with how your product delivers value? Does it scale?
   
2. Hypothesize new models. What if you priced by events instead of seats? What if power users paid more?
   
3. Experiment with new models on limited segments or SKUs. Think MVP, not overhaul.
   
4. Scale what works—and keep iterating as your business grows.
   

Billing strategy can no longer be an afterthought. It has to be dynamic, data-driven, and cross-functional—touching product, finance, sales, and customer success alike.

This Is the Billing Conversation We Need to Be Having

Yes, adaptive billing introduces complexity. But that complexity reflects a deeper truth: Not all usage is equal. Not all customers should be priced the same. And not all billing conversations should be left until renewal.

When done right, adaptive billing doesn’t just improve revenue alignment. It builds trust. It gives finance teams more control. It helps product and sales teams quantify value. And it sets up SaaS companies to scale sustainably in an AI-powered world.

Want to go deeper on this topic? Watch the Evolution of Billing webinar on demand to hear from Randy Wootton and Ken Rufo as they break down why adaptive billing matters—and how to put it into practice.

Debt can be a powerful tool for SaaS companies—but only when used strategically. Unless you’re acquiring another company or doing a recap, debt primarily serves one function: extending your cash runway.

With that in mind, what type of debt would be best for your company? Below is a simple formula and a modeling tool I put together to help you assess your options.

A Formula for Measuring the Cost of Debt in SaaS

(Total Interest + Fees) / Months of Runway Extension

This formula captures what you pay versus what you get. A low-interest loan might seem attractive, but if it doesn’t significantly extend your runway, it’s actually a really expensive form of financing. (For now, we’ll skip warrants.)

To make an informed decision, you must analyze three critical factors: loan amount, structure, and lender discretion.

Loan Amount: Balancing Size and Risk

The loan amount is the most crucial factor, but it is also a double-edged sword. A $10 million loan will extend your runway more than a $5 million loan, but the more you borrow, the greater the risk to your business.

A good rule of thumb: don’t borrow more than 50% of ARR.

• If debt stays below this threshold, you can cut expenses and still service the loan without completely gutting the organization.
• If debt exceeds 50% of ARR, the business becomes dependent on external funding, and control shifts to the lender or equity backers.
• The lower your gross margin, the lower your ARR debt ceiling should be. This rule assumes an 80% or better gross margin.

Loan Structure: Where the Magic Happens

The structure of a loan has a significant impact on its actual cost.

• Term loans should have long interest-only and long amortization periods—this is where most of the financial benefit lies. Short amortization periods (<24 months) don’t allow enough time to use the capital effectively.
• Lines of credit provide the best cost advantage, allowing you to borrow only when needed. However, it’s crucial to confirm whether the lender has discretion over each advance. If they do, funds might not be available when you need them.
• Revenue-Based Financing covers a lot of different structures; it must be modeled to be understood, but typically consists of multiple short-term advances at the lender’s discretion.
• Zero amortization is good, but risky. This structure does a great job extending runways, but what’s the plan when they come due? You can’t fund repayment out of cash flow, and the lender can take the business. Ironically, they are called “bullet loans.”

Borrowing Money When You Just Raised Equity

Most traditional venture debt is, frankly, dumb debt. It’s often structured as a term loan issued alongside an equity round, meaning the borrowed money just sits in your bank account with the equity proceeds.

These loans are marketed to “average down the cost of capital,” but what tangible benefit do they have for the business?

Run the numbers yourself: how much longer does the loan actually extend your runway over what equity alone would have done? Typically, not much. Ironically, the higher your burn rate, the more useful the loan, but the less likely your company will be able to repay it.

Compare Your Loan Options with the SaaS Loan Analysis Calculator

Before taking on debt, you must model different loan structures and repayment scenarios. Together with Maxio, I put together this SaaS Loan Analysis Calculator to help evaluate financing options and determine what’s best for your business.

Revenue forecasting is the backbone of every successful SaaS business. It informs strategic decision-making, helps secure funding, and ensures financial stability. But without accurate data, proper segmentation, and structured modeling, finance leaders risk making costly miscalculations.

In a recent webinar, Maxio’s VP of Finance, Tina Christofferson, and SaaS CFO expert Ben Murray broke down the best practices for SaaS revenue forecasting. They explored essential SaaS finance metrics, the mechanics of reliable revenue forecasts, and the tools that make this process seamless.

Below, we’re diving into the key takeaways from that discussion—including the foundational data sources you need, the role of segmentation, and how to improve forecast accuracy.

Why Revenue Forecasting Is Critical for SaaS Growth

For SaaS finance leaders, forecasting isn’t just about predicting revenue—it’s about staying agile in a volatile market. Whether you’re planning for investor meetings, setting hiring goals, or optimizing your go-to-market strategy, a reliable forecast is essential.

Key reasons why accurate forecasting matters:

• Cash flow management – Know how much runway your company has and plan accordingly.
• Investor and board expectations – Venture capitalists, private equity firms, and banks demand reliable financial projections.
• Headcount and resource planning – Ensure that your hiring pace aligns with revenue growth.
• Operational and product investment – Allocate budget effectively to product development and market expansion.

Poor forecasting can lead to missed revenue targets, inefficient spending, and difficulties securing funding. To prevent this, SaaS CFOs need to base their forecasts on the right data.

The 4 Essential SaaS Finance Data Sources

A strong revenue forecast is built on clean, structured data from four primary sources:

1. Financial Data – Sourced from accounting platforms like NetSuite, QuickBooks, or Sage, this includes revenue recognition, deferred revenue, and cash flow trends.
2. Bookings Data – Data from CRM systems like Salesforce and HubSpot helps predict future revenue based on sales pipeline activity.
3. HR Data – Payroll and HR software provide essential inputs for headcount planning and employee cost forecasting.
4. Customer Revenue Data – The MRR waterfall and ARR momentum reports provide visibility into revenue expansion, contraction, and churn.

Each of these data sources contributes to an accurate revenue forecast and allows finance teams to identify trends, set benchmarks, and make data-driven decisions.

The MRR Waterfall: The Bedrock of SaaS Forecasting

One of the most important reports in SaaS forecasting is the MRR waterfall (also called the MRR momentum report). This tool provides a breakdown of:

• New MRR – Revenue generated from new customer acquisitions.
• Churned MRR – Revenue lost due to customer cancellations.
• Expansion MRR – Revenue gained through upsells, cross-sells, or increased usage.
• Contraction MRR – Revenue reductions from downgrades or discounting.

Understanding these layers is essential for predicting revenue trends and optimizing financial planning.

For example, a SaaS company that primarily serves SMBs might see higher churn rates but stronger new MRR growth, while an enterprise-focused SaaS business might experience lower churn but slower expansion MRR.

By segmenting MRR data into different categories—such as go-to-market strategy (sales-led vs. PLG), customer size, or geographic region—CFOs can gain a clearer picture of revenue performance and future growth potential.

How SaaS Companies Can Improve Forecasting Accuracy

Building an effective SaaS revenue forecast requires more than just plugging numbers into a spreadsheet. Here are three key ways to improve accuracy:

1. Refine Data Segmentation

Not all revenue streams behave the same way. Segmenting your revenue forecast by factors such as customer size, industry, or sales motion can provide more reliable insights.

For instance, enterprise deals often have longer sales cycles and higher retention, while self-service SaaS businesses might see shorter customer lifetimes but greater volume.

2. Leverage Historical Trends

Using past performance as a benchmark can help identify seasonal trends, churn risks, and expansion opportunities.

For example, if Q3 historically has the highest customer churn, forecasting models should account for that trend instead of assuming a steady retention rate.

3. Integrate SaaS Metrics Software

Manually collecting and cleaning data can slow down the forecasting process and introduce errors. SaaS metrics platforms like Maxio streamline reporting by consolidating financial and operational data into a single source of truth.

By automating data collection and report generation, finance teams can spend less time wrangling spreadsheets and more time on strategic decision-making.

Want to See This in Action?

For a detailed breakdown of how SaaS finance leaders can enhance their revenue forecasting, watch the full on-demand webinar featuring Ben Murray and Tina Christofferson.

They cover real-world forecasting models, demonstrate segmentation techniques, and share best practices for improving financial predictability.

Watch the Webinar Now