The downside of usage/consumption-based pricing

Aug 22 in Pricing

I was recently running a pricing consultancy project with a company that created an "automatic scheduling" API-as-a-service to integrate with the scheduling software. The value of the service is that it saves the time of the manager from having to schedule the shifts.

Their pricing model was solely usage-based with the metric being: per scheduled employee per month. This had 2 major downsides:

No revenue until the customer started using the service.
Seasonality fluctuations with lower revenue during holidays and vacation periods.

We came up with 2 possible models to mitigate these revenue lulls.

Hybrid subscription model, where you pay a subscription fee per month from day one in addition to the transaction fee per scheduled user.
3-5 Transaction buckets/packages that you start paying for from day one. i.e. Package 1 includes x nr of transactions and if you go over you need to upgrade to the next package, etc., etc.

@all in the community- which one would you have chosen?

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