Can Chargify Do It?… Yes!
In sales calls, we occasionally get asked how (or even if) the caller can run a business on Chargify that’s uses “100% metered billing” or “100% usage-based billing” or “variable price billing”. Sometimes they describe their business as, “I charge my customers a different amount every time.”
What they usually mean is a business like Amazon Web Services… you only pay for what you use. No other fees, period. You get billed once a month, but only for what you used, which might be zero, or 78 cents, or 210 dollars.
They don’t think of it as a recurring revenue business, because the amount is not the same for every billing cycle.
But it is recurring revenue. And it’s easy with Chargify.
Once I explain it, I can sense their eyes opening wider and a smile coming to their face. I really love discussing business models and subscription pricing models and helping a developer or business owner or product manager discover how they can set up the model they want.
How To Do Variable Pricing With Chargify
This business is a recurring revenue business, but the amount charged is completely variable, starting with zero as a possible amount.
Chargify makes this pretty simple:
1. Set up a product that recurs every month, or every week, or every 3 days, etc. Whatever time cycle makes sense in your market. And set the product price to $0.
2. Set up a Metered Component to capture the unit cost of whatever you’re selling. For instance, if you’re selling CPU hours, then create a metered component called “CPU Hours” and define a price list for it. Make as many components as you need!
3. Subscribe your customer to the product.
4. Tell our system when your customer uses CPU hours. You can do that manually or via API calls. You can do it each time an hour is consumed, or you can wait and just tell us daily or whatever.
5. Chargify will generate a bill each month/week/day/whatever. Your customer will be billed for exactly the hours they used. If they used none, they will be billed $0. And if you don’t want them to receive statements/receipts for $0, you can tell our system not to send them if the amount due is $0.
6. Let the money roll in!
What if You Can’t Trust Your Customers to Pay a Large Balance?
Some markets require that you bill customers more often. We’ve seen this a fair number of times.
“My customers will get real estate sales leads that are worth $50 each. What if they take 4 a week but I don’t bill them for a month? I could be out $800 and the leads can’t be resold.”
There’s an easy answer… Tighten the billing cycle.
We have merchants that bill their customers every day.
Or every 3 days.
Or every week.
You can set up a billing cycle that’s defined as ‘x’ days or ‘x’ months. That allows almost anything you can think of.
So with those real estate leads, set the cycle to 3 days or 5 days. That way, you can never lose much money.
And remember, if the customer took no leads, then the bill will be $0, and if you have Chargify set to suppress $0 totals, then your customer won’t even know that a bill was ever generated and they won’t be bothered by receiving a $0 statement or receipt.
Hungry for More?
Our Components allow a lot of interesting billing scenarios for metered units and user-license billing. Think of text messages and software licenses. There are many more.
And you can set up intricate pricing of those units: things like volume discounts and tiered pricing. The first 100 units might be $50 each, but the next 100 units might be $40 each.
If this whets your appetite for interesting billing scenarios and interesting business ideas, learn more about Chargify Components.
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