Metered pricing is the type of pricing structure where the customer agrees to the price per unit. The total price is then calculated in arrears based on the amount of usage by the customer. This type of pricing is most commonly used when businesses are selling products with a true-up or overage fee. These products could be subscription services, usage-based products, or any other product which charges for per unit of usage.
Metered pricing is a great way for displaying the price of expansion while making it easy to capture value when your customer uses up more than they originally purchased.
Setting up metered pricing
To set up a SKU with metered pricing, we'll first create a SKU and select "Usage" as the pricing model. Then metered, since our customer will not be purchasing a pre-determined amount of units.
If each quantity of the product is priced at less than a cent, be sure to update the number of digits after the decimal point to a decimal number. In this example, we'll leave it at 2.
Next, we'll set up the price by going to the "Tiered Pricing" tab. If we have only one overage rate tier, we'll simply leave the quantity as 0 to infinity and set the price per unit rate. However, if the product has multiple pricing tiers, we'll enter the minimum and maximum quantity of each tier. And the price per unit of each tier.
Lastly, we can go to the "Pricing" tab to edit the "Unit Name" and add a brief product description. Then we'll click save and start using it on our deals!
Quoting with metered pricing
When quoting, we'll click on "Add SKU" to create a new line item with our metered priced product. For display purposes, we want this line item to be shown in it's own pricing table so we can click on the gear icon and select the relevant columns so show.
Now, our customers can see the extra rates they would be invoiced if they've surpassed the original quantities purchased.