A few weeks ago we announced our acquisition of Keen and how we integrated their platform into ours in order to completely disrupt the market with a brand new product, Events-Based Billing. We discussed the problem, the solution and how Keen + Chargify made this all possible here. Today, we answer what is Events-Based Billing and give you the transcript from our live panel event that happened on March 5th discussing Events-Based Billing. If you prefer the video you can also watch that here.
What is Events-Based Billing?
Events-Based Billing is the next generation of billing for B2B SaaS companies. What it enables is value-based pricing, meaning customers only pay for the value they receive from your product. With Events-Based Billing, you can leverage the massive amounts of event data you are already collecting. Feed this data and its properties into Chargify, in real time, and bill on any aspect of the event. Your data is sent in real-time, without having to modify or remove all the valuable attributes that provide insight into the products and services you are delivering to your end-users and customers. Once you’ve analyzed your data, you can determine the most valuable pricing for your products and services. Events-Based Billing allows our customer’s to bill based on any defined aspect of their event data such as videos watched, servers accessed, data stored, emails or SMS messages sent, etc.
To find out more about Events-Based Billing go here.
Why Events-Based Billing?
We saw a trend emerging in the technology market around B2B SaaS companies. Industry-leading companies like AWS, Twilio, Datadog, and more all have value-based pricing models. We’ve talked to numerous customers who have tried to implement an Events-Based Billing model themselves to compete with these giants, but it is very difficult to do without the right infrastructure. Our powerful APIs allow data to be streamed into the Chargify system based on your business-specific attributes, meaning you don’t need to trim down or remove data to make it fit. Using our query API, it gives you the ability to dig deep into your data and analyze it for the best billing and pricing scenarios. We’re bringing this to the masses so that any company of any size can now bill in any manner that fits their business.
Beyond The Subscription Model: Introducing The Future of B2B SaaS
The consumers of today and the businesses of today are very different to how they were five years ago. They’re more informed, and they’re more price driven. They understand what value is. The era of value pricing is upon us. If you spin up servers within your hosting provider, you only want to pay for those cycles, you don’t want to pay for unused infrastructure.
Chargify can deliver to our customers and through our billing methods with events based billing, real value based pricing.
Pay purely for every email you send. Not for the fact that you have an email server accessible to you. Pay per SMS. not for the fact that you have a mobile gateway accessible to you. Down to the last granular level, we can help our customers bill their customers in this method. And their customers can get real value out of the service that they’re delivering.
Sharon Ko: Good morning, thank you for being here with us for the “Beyond the Subscription Model” event. For our online audience we are here in the Pearl Stable, its located in the historic Pearl district of San Antonio. One of the top cultural destinations in our city. San Antonio is one of the fastest growing cities in the country and that includes our growing tech scene. Think about cyber security, health, information technology, all of those different sectors are booming.
I want to introduce you to our panel now. Paul Lynch, CEO of Chargify. Mark Thomason, Research Director of IDC and Patrick Campbell, CEO of ProfitWell.
Paul, let’s kick things off with you first.
Paul Lynch: Great
Sharon Ko: Tell us about the Keen acquisition and how that plays a major role in all of this.
Paul Lynch: Great, thank you Sharon. It’s great to be here in San Antonio this morning. The acquisition of Keen happened over the previous weeks. It’s been a point that we’ve been looking at for many many months. We looked at Keen, we saw this incredible platform that managed millions of Event Data points, we felt that this was going to be enormously complimentary to Chargify so we sat down, we put our thinking hats on and we came to an agreement. From this acquisition, Events Based Billing was born. Which is why we’re here today.
Sharon Ko: And when we look ahead is this the end of the subscription economy?
Paul Lynch: No, not at all. The subscription economy will persist. This is complementary to the subscription economy. This is a new way that subscription based companies will find to give value to their customers in terms of how they’re billing. This is about the creation of value at the consumer level. This is not around the death of the subscription economy. The subscription economy has been around for 10 years. It will persist, it will continue to grow. The subscription economy from a B2B SaaS perspective, even from a B2C SaaS perspective is exploding and it will continue to do so. The introduction of Events Based Billing on top of the subscription economy is a major leap forward around value creation for the customer. It’s in no means the death of the subscription economy, that will continue to flourish.
Sharon Ko: Patrick and Mark, what’s your take?
Patrick Campbell: I think the big take is that this is the evolution of the Subscription. I think what we don’t always appreciate because we’re kind of in the middle of it is that the subscription is the first time in history or first time in commerce where the relationship with the customer is baked directly into how you make money. And I think that when you look at Events or going beyond the subscription model, what you start to realize is we’re just getting continuation of getting closer and closer to that customer. Where we were kind of using the subscription as a little bit of a stop gap, where, yes we have that relationship with that customer, we can charge them, but now we’re going even a step further where we can actually charge them based on the value that they have. Where rather than jerry-rigging this value and then maybe having a little bit of a mismatch, we can actually charge them for exactly what they want and exactly what they’re using. Essentially you get all of the positive implication from a business perspective but also from a customer perspective as well
Sharon Ko: Can you give us some examples of how that could be used? Emails?
Patrick Campbell: Totally, I think there’s a ton and there’s going to be lot’s of examples that I’m sure we’re going to reference throughout our whole time here but I mean you saw this as we went from perpetual licenses back in the day and then we woke up and had this thing called “the cloud” and “SaaS” and we’re like “oh how should we charge?”. You know, ‘per user’ is kind of like the perpetual license, and then over time we started realizing, you know, our tooling got better, our ambitions got better, we started realizing, “Hey maybe we should start charging based on some of this usage, or where the value actually comes from” because for most products, per user doesn’t necessarily make sense. It’s per API call, per hundred emails, per thousand videos, a whole host of things, and so, you know there’s a lot of examples we can go through, you got Twilio, you got AWS, there’s even some B2C examples I’m sure will get referenced here as well.
Mark Thomason: And it’s really about, when I break it down here, it’s about the offer and the operations. So in the offer area, technology like this allows the person who is making the offer to have more tools to understand what’s valuable to the customer who’s using this, and identify that, and understand and model that. To be able to offer new ways of pricing something that doesn’t fit in these old models that we’ve grown up with. Now we have the tools to be able to do that. And on the operations side, being able to automate that. And do that at scale. So it’s just an evolution of recurring based models to be able to do things with a lot more complexity, but hiding that complexity, because you’ve got these analytics on top of it that can look at all this stuff that humans aren’t really good at analyzing. But we’re really good with creativity.
Paul Lynch: I think, if i can say one more thing, if we talk about the decline of the subscription economy in relation to the rise of event based billing. We need to be cognisant to the fact that Events Based Billing has been around for a long time, Chargify and Keen did not invent the concept of Events Based Billing. Amazon Web Services launched Events Based Billing in 2006. I think IT infrastructure and B2B SaaS changed on that day. That was an inflection point for the industry. Where suddenly consumers never got the same bill twice in a row. They took it down at a granular level and they delivered value to the consumer that way. So, if you look at what we’re doing here today, I mean, if we haven’t invented Events Based Billing what are we doing here today? What we’ve done is we’ve brought this mainstream. We’ve leveled the playing field. Before Keen and Chargify came together, major entities and organizations like AWS, like Twilio, your utilities out there in terms of the power world, your telecoms companies, they delivered unit based pricing to the consumer. Small companies, your $500 kind of companies that charge that way, this was out of their reach. By bringing this mainstream by making this wholesale, we’re leveling the playing field. We’re saying to smaller companies out there, “you can bill your customer the same way Amazon Web Services bills their customer.”
Sharon Ko: Well if this has already been happening, why haven’t companies already been implementing this and doing this?
Paul Lynch: I’ll take this. We took, I’m not going to say a back to front view on how to deliver this service, but I feel like a lot of billing companies were looking at the billing logic around their platform to try to deliver this. They were using aggregation companies to act as the middleman, to batch data, then they would run it through their billing logic within their billing platforms. We looked at it another way. Where’s the difficult component here? The difficult component is around managing millions, hundreds of millions of individual data events, pulling them into a platform and being able to correlate those and at that point put the billing logic on top of it. So we didn’t try to answer the billing issue, we answered the data streaming issue. We did that with Keen. Now Keen is a high growth, superb business within it’s own right. It has a super range of services that it currently delivers around customer facing metrics, internal analytics, IoT services from industries as diverse from oil and gas all the way through to parking solutions. When we looked at it and said “Ok if we can manage this amount of data events through Keen, how difficult is it going to be for us to take to data events that are collating in Keen and overlay our billing logic.” We looked at it and said, “It’s not easy,” it’s far from that, but it’s possible. And that’s what we’ve spent the last 9 months building.
Sharon Ko: So again, it levels the playing field and now all companies of all sizes can implement this and use this?
Paul Lynch: A hundred percent. This is no longer something that is open to your CPS’s of the world, your Microsoft, Azure, your AWS’s. If you’re a small B2B SaaS business, if you care about value to your consumers, this is the billing mechanism we feel you should be using. The predictable use cases? The business to developer space of SaaS we see is very strong. We’ve seen the likes of Datadog growing 88% year on year utilizing this model, moving away from the market. We’ve seen AWS using this model. Moving away from the market. I mean, B2B SaaS has been around maybe 20 years, but I still feel like we’re in the midst of a disruption. And in any disruption in any industry you have winners and you have losers. Our perception is that those that are winning are those that are delivering value to their customers and they deliver value to their customers by not charging them purely on a subscription basis, but down to a per-unit basis and show those guys that they’re delivering real value.
And it’s important because millennials demand value. They’re far more price conscious than we are, in my opinion, and they’re asking themselves, “Why am I paying for infrastructure that I’m not utilizing? Why can’t I just pay for what I’ve utilized instead of what you’ve made available to me? That’s old.”
Patrick Campbell: Yeah. And from an outside perspective, I think great technology, it’s really hard to create a wave, I think there’s very few companies in the world that have actually created a wave. I think the best technology companies are ones that recognize the wave and push the wave forward. And I think for the past decade or so we as consumers have just been getting comfortable with subscriptions, or this recurring relationship, right? Especially with all these different products we now have. And I think operators have been able to start to dream a little bit more about how to get rid of some of these constraints that hold us back from getting closer and closer to that customer. You’re seeing so many different examples, we mentioned a lot of nerdy B2B software, but you’re even seeing this in the consumer space. In the coffee industry where you actually have scales that are connected from an IoT perspective that can measure when the beans are low and they can send you more coffee. Or even in the world of Barcelona, and this is an example we like to joke about, there was actually a feeder performance implementation where they actually had cameras on the back of every single seat and they measured how often you laughed at this comedy club. And they would present to you with “Here’s your price, that’s the flat rate price and here’s the price based on how much you actually enjoyed yourself.” Right? And so, there’s a lot of dreaming happening, and we’re probably not going to be, you know, at theatres being charged based on our enjoyment levels anytime soon, but again, we’re pushing that way forward. We’re reconsidering what we can actually do and I think it’s better for customers and it’s better for businesses. This is how you can actually ride and make sure you’re not charging Johnny & Jane’s startup the same as Disney for different levels of usage.
But in addition to that it’s also great for consumers because you’re getting that value that you’re actually paying for. You’re not underpaying, you’re not overpaying. What you’re paying is almost exactly right.
Mark Thomason: And predictability is a really important thing here. Because anyone who’s ever travelled outside the country with their cell phone and didn’t enable international travel and then finds themselves with a $600 bill because they charged for consumption all the way through their calls and data. That’s not a nice thing. That’s not a happy customer. So being able to model, and have tools that can model this data going through so that when you’re making the offer, the people that are creating these new business models or these new pricing models, having that ability to look at what’s going to happen, how’s this going to impact my heavy use customers versus my low use customers and be able to make something that will keep these people happy and these people happy while capturing my value better.
Patrick Campbell: Yeah and I think the transparency thing is really really prescient, because you know previous consumption model’s that existed they didn’t necessarily have that transparency. And not necessarily because the companies didn’t want to provide that, although I’m sure there’s plenty of companies that didn’t, but there just wasn’t real time data, right? And so in that situation, now you get a message that says “Hey, you’re roaming by the way”. But it used to be that the billing was just so complicated that it couldn’t talk to these other parts of the company because it would just cost way too much dev time. Now we’re getting to the point where we can actually have that complete transparency that’s going to force companies to be a lot more transparent and consumers to understand exactly what they’re paying for so that they can make decisions based on that information, not quite for the first time but for the first majority time, if that makes sense.
Sharon Ko: And Paul, I think you had mentioned earlier if you could elaborate a little bit more about working with Keen to build this new product.
Paul Lynch: Yeah. Luckily Keen was a neighboring company to us. So we had a lot of insight in terms to the team over there. Their capabilities, the platform itself. We felt very strongly that because we were doing something that was innovative and new, we didn’t want to lose focus about where Chargify has gained its market position. We put together a strong team, outside of the traditional product and developer areas within both companies. We called it a ‘skunkworks’ after the famous skunkworks back in the second World War, those guys went, they put their propeller hats on, we all got together, we had a lot of late nights, we did a lot of work and on the other end we came out with Event Based Billing. So the marriage between Chargify and Keen has been a great one. There’s been a lot of commonalities between our outlook. I also think as a leader, when you find a team that believes in the mission, most of the hard work is done. If you have the right people on that bus, if the mission is right, if they feel like what they’re doing is going to make a difference, they’ll drive themselves forward. It’s not going to be down to you to crack that whip. It’s been a dream kind of project so far. We really feel the narrative around this is right. Everyone we’ve tested this with has come back to us and given us huge affirmation in terms of the efforts that we made. So now it’s down to the go-to-market team. We’ve done the hard work, now it’s time for the even harder work.
Sharon Ko: Now maybe some people in the audience and online as well are wondering, how can companies implement this. How’s that possible? How will that work?
Paul Lynch: Again, I’m not using a tired analogy, but this is around the democratization of data. We don’t want this to be difficult. We pride ourselves in onboarding. We’ve been voted by the likes of IDC as one of the best onboarding businesses that’s out there. We want to bring customers in. We want to bring users in. We want to get people using this. We want to level this playing field. Immediately from a technical perspective, the answer is we need to start streaming data. It’s from the data that streams onto our platforms that we can then give you certain analytical tools that we can then show you what the forward nature of your billing would look like. Once we have the data we can work with you around how we bring the logic of billing above it. It’s a hand holding process. We don’t expect people to be experts on this day one. We’re the experts. We recognize the complexity of this. The reason why our competitors in the billing space, the reason why our competitors in the event data management space haven’t launched services like this are manyfold. But really it comes down to a couple of key points. It’s HARD. There’s a complexity around billing platforms that certain companies are frightened to take on. There’s a level of inertia in the market where the standard subscription model is ok. I would argue that Siebel Systems if they were given the option back in the day to move from their perpetual model and to adopt a subscription model and a SaaS model like Salesforce, I’m pretty sure Tom Siebel would have had a different view and he would have done that now.
So how do you get involved? Talk to us. We’re here. We want to hold your hand and help you on this journey. We want to walk it with you.
Sharon Ko: And I know you mentioned that you have to collect data, your team of experts will help, but ideally could a company sign up, next week could that happen? In two weeks? Three?
Paul Lynch: You can sign up today. I don’t want to get into a sales pitch…yet. (laughter). I can’t help it. When you’re passionate about something, you always want to share it’s best light. www.chargify.com. Email sales! (laughter).
Mark Thomason: Will customers have to use two different applications to use this?
Paul Lynch: No. Single unification in terms of the application. You’ll get full access, in terms of your Keen data flows through Chargify. Full billing. And some pretty interesting analytical tools which we discussed that are coming as well. One of the things we really like about this, that myself and Mark have discussed is the predictive “What if?” nature. Like if you look at traditional subscription modeling around billing, it’s pretty simple. I mean, I have a hundred users. I charge $100/month, what if I charge $200? Basic mathematics. But when you get into Events Based Billing, and real time streaming of data, once we have data sets over say a week, a month, a quarter, you’re able to look at it and say, “Hey, what if over the last quarter rather than charge per seat, what if I charge per API call? What if I charge per email sent?” What would that “what if” scenario look like?
And that’s part of this, and that’s really powerful. It allows our customers to, one: our customers to add real value to their clients and it lets them understand their business at a granular level that’s never really existed before.
Mark Thomason: And to me that’s the sexy part of what you’re going to offer in the future, is to be able to have that capability that someone can figure out what’s going to happen to their users if you choose this or choose that. I just did a marketscape on subscription management companies, of which you guys were in it, and I asked the question “Which pricing models do you support?” I asked for 25. Everyone answered all 25. There’s a lot of choice that these products give the user. But there’s little help to understand what you should do. If you want to be innovative and try something new, what do you do to help your situation versus make your customers unhappy. And having tools that have the ability to understand what are the value metrics and what’s the impact going to be to this new pricing model that you’re thinking about is awesome.
Sharon Ko: So Mark, going off of that, the disruption of the subscription economy, I mean you work with these companies, so looking ahead, how do you see this and how this will change?
Mark Thomason: It would be really cool if like in a future scenario where you want to choose like a new business model or a new pricing model and you get this sidebar and it has all the pricing models and it has the ARR at the end of the year and what its going to do for you. It’s going to run all the numbers for this scenario and show you the envelope and show you the year and allow you to choose something based on crunching a boatload of data, especially if you’ve been collecting usage data for the previous year to be able to go, this is a pretty good understanding of what might happen if you choose this.
Paul Lynch: I’m taking notes.
Patrick Campbell: I think it removes a lot of barriers too because we see a lot of companies and work with them on their pricing, and oftentimes what will happen is they will be able to figure out “Hey this is what we should do.” and then the billing holds them back or the finance team holds them back. But what I think is really interesting about this is that it’s going to drop those barriers so that people can actually focus on these different levers of growth besides acquiring more customers . You’re still going to spend half of your budget acquiring customers through sales and marketing just because of the nature of wanting to be high growth, but there’s these other levers of monetization retention that oftentimes don’t get a lot of focus. So here, its “Hey dream about these 25 different models that are sitting there, you can kind of see what the predictions are for ARR and all of a sudden you can go into your customer development and see what makes the most sense and basically have all that data so you can make a pretty quick decision and presumably then, well I don’t know if it’s one button, but a few buttons, implement it, so that you can take advantage of that research.
Paul Lynch: It’s significantly less buttons than what you have to push today.
Patrick Campbell: A few buttons.
Mark Thomason: And then the hard part about it is getting the customer on board and telling them what’s going to happen. If you choose this, now you have this new offer based on this new metric that they haven’t seen before. It’s like, “What’s going to happen to me? What if I choose this? I don’t know what my sessions are. I don’t know that I’m going to be charging by inferences now, what’s that going to do to me as far as what I’m going to pay?” and to be able to have a calculator for the vendor in setting up these pricing models, how it’s going to affect their customers, and maybe for the customers to be able to understand as we go through that change process because we’re slow to change, humans are, you know we want the best deal and we don’t like surprises. So helping them through that process. Helping them to the new way of doing things is really key to helping with the adoption of this.
Sharon Ko: And again, Paul as you had mentioned, that’s the beauty of your team of experts, that’s going to help companies implement this. Paul, is there anything for closing thoughts?
Paul Lynch: So, as I said, I think we’re in the midst of a disruption. I think, when Events Based Billing gets democratized and gets into the market, it’s not really going to be a push kind of scenario where you’re going to get vendors pushing this upon consumers. It’s going to be a pull. Consumers are more knowledgeable, they’re going to say to their vendors “Why can’t you do it like Amazon Web Services? Why can’t you do it like the other companies that are out there?”. At that point, those companies are going to have to have a reasonable and viable answer to put back into the pace to say why they’re not offering real value to their customer base. Genuinely. We’re incredibly excited by it. We’ll see how this develops in the coming months and the coming years. But I do feel like we’re at a tipping point in terms of value being created in B2B SaaS. I understand that there are certain use cases, those around the business to developer, B2B SaaS companies, the IoT companies, that have bigger applicability to this, but I can see this going quickly, I can see this going very mainstream, I can see consumers demanding it, and at that point, i think for the first time ever we’ll have shown real value in the market. We’ll have enormously contributed to the subscription economy, and I just look forward to getting on this journey. We’re great partners with ProfitWell, with IDC, and I look forward to this journey going forward.
Sharon Ko: We have some extra time so we’re going to take some questions from the audience. If there are any questions:
Q: How would a company achieve this previously?
Patrick Campbell: A lot of money.
Paul Lynch: I’ll continue with my sales pitch. As I said a little earlier, a lot of billing companies and a lot of companies out there were looking at it from the wrong way. They were looking at it from the billing logic perspective as opposed to the event data management perspective. So for them to manage this they would have had to go out, build out their own event data management platform. Now there are a number of businesses out there in this space, I think the largest, not naming names would have raised 322 million dollars, the second would have raised 179 million dollars, the third would have raised 122 million dollars. This is not a cheap kind of path to get on. There’s enormous overhead around this management, there’s a lot of skills around it too, in terms of just being able to build this out. That’s just the event data management component. Thereafter you’re trying to build billing logic into this to overlay it onto the event. So, is it impossible? Of course not. Lots of businesses have achieved this. AWS, Datadogs, ETrades. These businesses use this as a mechanism to bill. The complexity around building it is what makes it very difficult for smaller companies. So this isn’t about Keen and Chargify coming together and inventing Events Based Billing. This is about Keen and Chargify coming together and taking it mainstream. And allowing smaller companies access to it so that they can take advantage of the value proposition, give that to their customers, and ultimately break away from the pack like the previous companies I’ve discussed have done. Is that…?
Mark Thomason: Mmhm. In my world I’ve basically taken the whole monetization area and turned it into a monetization ecosystem. So there’s a graphic and it has key functions for monetization. You know, one’s like ‘offer’, one’s the ‘rating/billing/invoicing’ part, you got ‘payments’ in there, but one of the bubbles is what I call “usage intelligence”. And that is a group of technologies that basically understand what the usage of a thing is. And this all started years ago with intellicom of mediation. That’s what they call it, data mediation. When you take your cell phone and you go for a drive, you’re going through lots of different cell phone towers. And those cell towers are owned by different companies, not by Verizon or AT&T, and so they’re using that data that comes from those cell towers and aggregating that up and knowing who that customer is that went through these cell towers, aggregating how many minutes were used, and then coming up with a bill that goes back to your carrier, and that bill goes back to you. And all this stuff happens almost at real time. So that’s where that technology came from on the telecom side. And that stuff is coming over into the non-telecom area. But most of the time in the non-telecom area, this is a custom application that’s built. So it’s a process that people have to build, with custom code, developers in a room solving that problem. And what typically happens is they solve the problem, and it works, great. And time moves on and then the people that made that solution might go different places. And then when you need to update it to support something new or a new technology, then you have to bring the old band back together again so they can either update it or it’s on you to fix it. A lot of times, things get brittle, things get old. It’s better to have that kind of ability built into the platform, and that platform provider is an -as-a-Service, and that platform provider is always working on innovating that, because it serves X number of customers. It’s in their best interest to involve that technology and keep it going because their customers are pushing them forward. The democratization of this type of technology, making it easy to use, making it easy to consume is really the news.
Paul Lynch: Yeah. And if I can talk to the telecoms example for a moment as well. From a pure economics perspective, it was the rise of the telecoms business if you go back to the deregulation of the telecoms networks throughout the world, 80s and 90s, where we started talking about earnings in a EBITDA basis. Because of the massive investment that these telecoms companies required to build their networks in terms of servicing their business. One of their huge investments was around how to bill. You would have traditional telecoms companies out there charging tens if not hundreds of millions of dollars on an annual basis to manage this kind of service that we’re delivering now into the mainstream around B2B SaaS, for as low as $499/month. So that degree of investment is applicable in that we’re doing it at such a lower level because you don’t have that huge capital cost investment level so you can take advantage of it today.
Patrick Campbell: To kind of summarize, your billing was always a cost center. It was a cost center that engineers didn’t want to work on it. It wasn’t something that was fun or innovative. But you’re basically moving, with this new type of model and new type of thought, billing from being a cost center to a profit center. Where you can actually do things to boost revenue, rather than pull teeth and try to get people to update the thing that you need.
Sharon Ko: Do we have another question?
Q: How is what you’re talking about different than usage billing?
Paul Lynch: Good question. Usage billing, from a technical perspective usage billing has been around as well. The technical component in terms of delivering usage is around using what you would call an aggregation company. Keen being an aggregation company within itself, they would collect data, they would then batch it, and they would at a pre-approved time send it to the billing company.
So let’s say we were sending out emails on a daily basis. We would send out a million emails, they would be a million events, those million events would be batched and sent across in a pre-approved format to a billing company. The billing company would then run their scripts and logic above that batch data. How is that different? Why did we do it that way? We did it that way because if we streamed a million events on a billing platform, it would immediately fall over. Because it’s not designed to manage large scale data ingestion, whereas an aggregation platform is. So that’s why it was done in that format.
Why is Events Based Billing better? Events Based Billing is better because it’s done in real time. So you’re not batching information, you’re sending it across in real time. In business and in life timing is everything. If you’re able to act quicker, then you have a distinct advantage over your competitor. So the likes of say Events Based Billing is managing large, real time, streams of data coming into a platform and immediately using the billing logic that resides native to that platform to generate bills, invoices, costs, manage pricing. Do what-if pricing scenarios around what would it look like if I changed from billing on API calls and I started billing on data movement?
Mark Thomason: You can talk also about attributes, right? Attribute based billing. It makes it easier.
Paul Lynch: It makes it much easier. So, why are you billing purely by an email that’s sent out. Can we not bill by a different cost for an email that’s sent out from 8 in the morning to 8 in the evening? What if that email has embedded HTML code? What if there’s a video code in there? We can put multiple different attributes from the events that we’re collecting from a single data point and then price that differently to others.
So you could have large scale attributes that you would associate into the individual events which creates differing billing points and you can put different prices on that.
Have you got an example of that?
Patrick Campbell: Yeah, it’s been interesting right, because you look at personalized pricing, it’s been so hard that a lot of people haven’t done stuff like this. I mean, there’s a couple of examples. You look at Spotify on the creator side. They basically pay for streams. If you’re a creator and you look at what’s going on with those streams, do I need to get to this threshold versus that threshold? I think there’s a lot of companies out there, when you look at something like Events Based Billing, where they want to go there, they want to do some sort of transaction. They want to be able to bifurcate these types of transactions versus these types of transactions. But they really haven’t been able to. Telecoms is a really good example.
But I think also one thing that’s kind of interesting here is that you can start to offer up different types of customers different options. Right? You look at a company like MailChimp, they have 3 different pricing models, you can do transactional, you can do batch, or you can do Enterprise. And I think it’s one of those things that we haven’t really talked about, which is, as you were just alluding to, different segments want to buy in different ways and managing one of those segments is hard enough right now. Managing three, five, you know, I think we’re going to get to a world where we do segment based pricing. Where the way folks come through in one particular channel, or the way we can identify them as a certain persona, their pricing’s going to be different as those other personas, and those other segments as well.
Paul Lynch: Absolutely
Sharon Ko: Do we have another question?
Q: Have you talked to your current customers about this? What is their response?
Paul Lynch: This has been an extremely large endeavor. Yes, we spoke to both current sets of customers across Keen and Chargify. Just about everyone we’ve spoken to, even beyond
our install-base has come back to us and has affirmed that this is a good evolution in terms of the subscription economy. The industry analysts and experts we talk to, our partners, our install-base, all come back — interestingly when we did speak to business to developer companies, they came back to us and said “Ah! We’ve attempted this in the past. We’ve been unsuccessful in terms of it’s implementation for XYZ reasons”, so they’re knowledgeable about this. There wasn’t a Eureka moment where we walked out and said, “Wouldn’t it be great if you could charge your customers per API call?” Their response was, “We know it’d be great if we were able to do this, we’ve been unable to do this for these reasons, how have you answered those roadblocks?” Once we explained that we had taken the view to look at the Event Data Streams rather than the Billing Logic, then the lightbulb went off, and they said “Eureka, I see it!”
We ran a BETA program on this. It’s been very successful. It’s been a small data set, 20-25 customers, each of them have come back and been happy with this. So yes, the short answer is there’s been wholesale approval, and where we have wanted it, adoption of this Events Based Billing platform.
Mark Thomason: There’s a lot of new technology out there in the market for SaaS. A lot of workloads moving from on-premise to SaaS. And a lot of new companies, like Datadog, are in this functional market that IDC tracks called IT Operations Management. It’s a 10 Billion dollar market, of which 2 Billion dollars is SaaS-based companies. And of those 2 Billion dollars, those are going at 55%, that’s historical. That’s one example, but there’s other examples of several other data-focused, data-centric types of markets that are growing very quickly in the SaaS world to basically replace or update or address new use cases. That we didn’t have in the old world of on-premise and data centers. So this type of ability will give them more tools so if they want to charge their sessions or different attributes, now the world is their oyster and now they have to figure out what matters to their customers so they can understand what their willingness to pay is for this value, and this new way of encapsulating value. That’s the work to do. So this is the beginning of the next way of selling something that is the same thing you’ve been used to but a different way of packaging it. Maybe we can price on outcomes in the future? Instead of just emails, maybe it’s for the event of emails or an event of something. Because you know when the event starts and stops. And you can say, stuff in between here is part of the outcome that I want, so…possibilities!
Q: Which competitors are offering similar solutions?
Paul Lynch: There’s multiple companies who have built this out but we wouldn’t consider them competitors. Within the billing and revenue management competitive landscape, this is the first move to offer this out on a wholesale basis. We have the first move or advantage. The market is moving in this direction. Why are we so lucky to be the only people in the world that know that Amazon is the fastest growing IT business in history? Are we the only people that know that Datadog is killing it because of the way that they offer value based pricing? No, our competitors know that. I’m quite sure they’ll follow behind us. Right now, none. From an advantageous perspective, Chargify and Keen have a large install base, a very loyal install base. These guys can take advantage of it. Net new acquisition of business will come to us. Others will follow behind us. When your competitors start mirroring your product strategy, that’s probably the biggest compliment you can get in the market. I’m quite sure that will happen. I do feel that we’ve had some unique advantages and we’ve had some, dare I say, luck along the line here. Keen existing and being so close to Chargify was very serendipitous for us. To build this takes time, takes effort, and it takes expertise, which isn’t wholly available in the market. So, no our competitors today aren’t doing it. We have an expectation that they will follow us. How long it takes them will be down to how committed they are to it, and I can’t imagine they would ever be more committed to it than we are. This is something we really have nailed our colors to the post with. We really want to drive forward. We really want to talk to our customers about it and show them how we can deliver value.
Sharon Ko: Many thanks to Paul Lynch, Mark Thomason, Patrick Campbell. Can we give them a round of applause? We are going to close now with a video and more information about Chargify.
Billing is in a constant state of evolution. Every few years, a new idea disrupts the market and sparks a new way to bill.
Software billing has seen clearly defined eras. First there was the perpetual license, then per-user seats, then feature upgrades, and most recently, subscriptions and services. Today, we are on the dawn of a new era.
Chargify is pioneering the way with Events-Based Billing. For the first time ever, companies everywhere can easily bill like the biggest software and service providers in the world. We equip you with the billing tools you need to link the value you provide to the invoices you send your customers.
Events-Based Billing lets you move beyond standard usage-billing by leveraging the massive amount of event data that you already collect. Feed this multi-faceted data into Chargify – in real time – and bill on any aspect of what is happening.
You can bill on any metric that applies to your business. From seconds watched… to requests received… to click through rates. Events-Based Billing gives you the power to choose.
The era of value pricing is here. What value does your data hold? Find out with Events-Based Billing by Chargify.
Find out more about Events-Based Billing here.