{"id":10889,"date":"2022-02-08T08:06:08","date_gmt":"2022-02-08T08:06:08","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/08\/m3ter-exits-stealth-with-17-5m-to-help-saas-firms-implement-usage-based-pricing\/"},"modified":"2022-02-08T08:06:08","modified_gmt":"2022-02-08T08:06:08","slug":"m3ter-exits-stealth-with-17-5m-to-help-saas-firms-implement-usage-based-pricing","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/02\/08\/m3ter-exits-stealth-with-17-5m-to-help-saas-firms-implement-usage-based-pricing\/","title":{"rendered":"M3ter exits stealth with $17.5M to help SaaS firms implement usage-based pricing"},"content":{"rendered":"

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London-based startup m3ter<\/a> is exiting stealth mode today armed with $17.5 million in funding as it looks to tackle the challenge of usage-based pricing for software-as-a-service providers.<\/p>\n

Today\u2019s round was led by Kindred Capital and included participation from Union Square Ventures and Insight Partners.<\/p>\n

M3ter is aiming to solve the difficulty of implementing usage-based pricing in SaaS products. Doing so is far from easy, especially for cash-strapped startups that are more focused on growing their businesses.<\/p>\n

To enable usage-based pricing, SaaS firms must merge usage data with commercial terms, so their customers have up-to-date information on how they\u2019re using a product and how this converts into spend. That\u2019s difficult to do without customized software. In addition, a usage-based pricing model also makes it more difficult for SaaS firms to forecast future customer use and revenue.<\/p>\n

Because it\u2019s so hard to implement, many SaaS firms opt for a simpler subscription-based pricing model. Yet m3ter says a usage-based model is far superior. It points to a study<\/a> by OpenView Advisors LLC that shows how SaaS businesses with usage-based pricing are growing at an average of 29.9% year-over-year, compared with 21.7% for other pricing models. That\u2019s because usage-based pricing enables easier adoption of new products, costless upsell, better margin control and greater customer satisfaction, m3ter said.<\/p>\n

M3ter added that two of the world\u2019s largest SaaS companies, Snowflake Inc. and Datadog Inc., have both switched to usage-based pricing.<\/p>\n

M3ter was co-founded by Griffin Parry and John Griffin, two entrepreneurs who former previously built and sold the back-end-as-a-service firm Game Sparks Technologies Ltd.<\/a> to Amazon Web Services Inc. The company has built a unique data infrastructure that works by capturing granular usage and cost data at scale.<\/p>\n

It allows SaaS firms to carry out complex price configuration based on that data, calculating customer\u2019s bills in real-time and feeding that information to the SaaS firm\u2019s own billing and finance system as well as the customer\u2019s own dashboard, so they can see how much they\u2019re going to be billed at any time. M3ter also promises easy implementation with a flexible, application programming interface-based architecture.<\/p>\n

\u201cUsage-based pricing offers huge rewards for SaaS businesses, but it isn\u2019t easy to implement,\u201d M3ter Chief Executive Parry said. \u201cWe experienced the pain ourselves when building our previous startup, but we also saw what good tooling can look like at AWS.\u201d<\/p>\n

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE he believes usage-based pricing is critical for SaaS companies to make the cloud value proposition work, so customers only have to pay for what they consume. He said although that\u2019s relatively easy for infrastructure service providers such as AWS, it\u2019s much more difficult for software providers.<\/p>\n

\u201cThe difficulty is vendors have to estimated consumption and then costs, aggregated across all of its customers,\u201d Mueller said. \u201cThat\u2019s not trivial but at the same time it is critical for vendor success. So it\u2019s good to see a startup like m3ter trying to tackle this. We\u2019ll be interested to see how well its offering works in the real world.\u201d<\/p>\n

M3ter has been operating in stealth mode up until today, but it already has a number of customers, including Redcentric Solutions Ltd., Sift Science Inc. and Stedi Inc., as well as a new partnership with the revenue delivery platform provider, Paddle.com Market Ltd.<\/p>\n

\u201cWe chose m3ter because they were the only provider that treated the problem of billing for metered pricing as a data problem, not a billing problem \u2014 which is the only way to solve it with any degree of scale and complexity,\u201d said Stedi founder and CEO Zack Kanter, who has also invested in m3ter. \u201cCombine that with their ability to execute based on their own roadmap and feedback, and we see this as a solution that will continue to compound for many years.\u201d<\/p>\n

M3ter said it will use today\u2019s funding to build on its early traction and meet the rising global demand for its product by growing its teams in Europe and the U.S. The company also plans to build more advanced analytics tools for sales and finance teams.<\/p>\n

Image: Kreatikar\/Pixabay<\/a><\/h5>\n
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