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Data for subscriptions podcast - Episode #15

The Basics and the Benefits of Usage Metering

Guest

Demed L'Her

Demed L'Her
CTO at DigitalRoute

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Episode description

The Basics and the Benefits of Usage Metering

In this episode, host Behdad Banian and DigitalRoute’s CTO discuss an exciting new product related to usage metering. They highlight the importance of metering, especially in the context of consumption-based billing, and explain the benefits of using a purpose-built metering solution and how it simplifies the process of billing and its significant impact on subscription businesses. They also address the challenges of traditional billing systems.

Highlights

It might be obvious. It’s kind of in the name, but just to make sure that we at least have a common understanding, what is usage metering?

It’s about measuring, metering, if you will, the usage of a given service by a customer, and what that measurement is can differ depending on your business.

So for instance, a meter could be measuring how many kilometers someone drives a car from a rental service, or how many gigabytes of data a customer of an online backup service might be using, or how many images one might be generating with generative AI service.

Why do businesses need metering?

The obvious one is that metering is the foundation for consumption-based billing. I think this one is pretty clear. You cannot bill for something that you cannot measure accurately and timely.

If you only do flat fee subscriptions today, you probably still have a need for metering. The easiest way to understand that is that typically, you have limits within subscriptions. Or at least you have more and more limits. It used to be a lot of all-you-can-eat, but as your service grows, people now are a bit more concerned about protecting margins and ensuring people don’t abuse the services. So typically, there’s a cap within that service. It’s all-you-can-eat… up to a certain level.

Let’s talk about implementation. How hard is it to deploy a new (consumption-based) business model?

It could be as simple as a 3-month project. We are talking about moving from these 12 to 18-month business billing transformations into something that you’re gonna do on the side and be more agile. It’s more for testing a few things on the side of your portfolio.