Progressive Billing
Progressive Billing (or threshold billing) represents a newer, vendor-favorable take on Pay-As-You-Go pricing. Vendors set invoicing thresholds, and customers are billed as soon as these limits are reached. Access may be restricted or blocked if invoices aren't paid promptly, minimizing vendor risk and upfront costs. Billing thresholds can also be adjusted based on the customer's account size and payment history.
What does this pricing model solve?
- Encourages organic account growth
- Keeps vendor upfront costs low
- Works effectively with both PLG and PLS approaches
Why is this pricing model challenging?
- Limited customer commitment
- Seasonality and trends impact revenue
- Customers face difficulty predicting their costs