In enterprise software-as-a-service (SaaS), usage-based pricing, a pricing model in which customers are charged only when they use a product or service, is becoming more popular. According to a report from VC firm OpenView, approximately 60% of SaaS businesses currently offer some form of usage-based pricing. Recently, Google Cloud's API management platform Apigee made the transition, as did vertical software giant Autodesk.
However, while usage-based pricing has its benefits, it can be difficult to monitor from a billing perspective. Companies that pay for pay-as-you-go products often have a hard time figuring out how much to charge their customers for that product.
“This is a new challenge for engineers as they need to build real-time infrastructure to enforce cost controls and integrate usage data with product and revenue teams,” said Co-Founder and CEO of OpenMeter. Peter Marton told TechCrunch. interview. “Real-time data is also a challenge on the consumer side. A tight feedback loop between customers interacting with usage-based products and consumption reflected in billing and usage dashboards will help control spending. is essential.”
Marton experienced first-hand what he calls “metering” issues while working as a staff software engineer at Stripe. There, he came across a blocker that collects usage-based pricing data from different providers and infrastructures and analyzes this usage collectively.
Seeking a solution, Marton teamed up with András Todt, a former Cisco software engineer and former colleague at software development company Risingstack, to launch OpenMeter, which measures customer app usage.
Marton explains that OpenMeter is built on Apache Kafka, an open source toolkit for processing real-time data feeds and processes “usage events” across an enterprise's technology stack. Events are then transformed into human-readable consumption metrics that are aggregated into billing and financial dashboards as well as customer relationship management databases for review by product and revenue teams.
OpenMeter can also enforce usage and rate limits. It can also implement usage-based or hybrid pricing, allowing businesses to bill their customers more transparently (at least in theory).
“OpenMeter is … built for engineers, providing a configurable architecture to process real-time usage data and control costs,” Marton said. “Large enterprises choose OpenMeter because of its configurability. It's difficult to replace decades of monetization infrastructure all at once, so we built a solution that engineering teams can deploy in stages. ”
One of OpenMeter's tracking dashboards.
Now, OpenMeter isn't the only one in the game when it comes to vendors addressing the metering dilemma.
There's Metronome, which recently raised $43 million for its software that helps businesses offer usage-based billing, and Amberflo, which is building a set of tools to transform SaaS pricing with pay-as-you-go pricing. Elsewhere, M3ter provides usage-based pricing solutions for his SaaS business.
So, what are the characteristics of OpenMeter? First, it is open source. OpenMeter's software is free to use, but there are paid options for businesses that prefer a managed plan.
Merton hints that it will be cheaper than competitors, but admits that exact pricing is still being worked out.
“Competitors in the usage-based space only cater to revenue teams with a closed-source, bill-first approach,” he said. “OpenMeter focuses on a new generation of his AI companies.”
In any case, OpenMeter was able to find some early success, raising $3 million from Y Combinator (who nurtured it), Haystack, and Sunflower Capital. Merton said the company, which currently has four employees and is based in an office in San Francisco, has “multiple” market-leading AI companies as customers, but he declined to name them.
“The economic downturn has forced businesses to tighten control over spending, forcing them to understand per-user costs and enforcing usage allocations. Meanwhile, revenue teams have struggled to find new revenue streams. They need to find actionable insights from their usage data,” said Merton. “This is a tailwind for OpenMeter.”