Benchmark data showing how usage-based and hybrid pricing are reshaping software monetization
Software companies are broadening their monetization models beyond flat-fee subscriptions. In a 2025 survey of more than 240 software and AI companies, flat-fee subscriptions fell from 29% to 22% over the prior 12 months. This shift reflects a change in how software companies align revenue with customer value. Executing consumption pricing at scale requires sophisticated billing infrastructure that can meter usage accurately, support flexible pricing models, and provide the financial controls that enterprise finance teams require.
Key takeaways
- Variable monetization spans company sizes: High Alpha reports that consumption- and outcome-based revenue appeared in total ARR for 27% of companies below $1M ARR, 20% at $1M to $5M, 24% at $5M to $20M, 38% at $20M to $50M, and 40% above $50M
- Variable pricing outgrew subscription: In the 2025 benchmark, outcome-based companies grew 65% year over year, consumption-based companies grew 43%, and hybrid companies grew 40%, against 34% for subscription-priced companies
- AI pricing preferences favor variable models: In an Andreessen Horowitz survey of 100 enterprise CIOs about AI applications, seat-based pricing was preferred by 21%, behind usage-based at 39% and hybrid at 23%
- Hybrid models hold a large share: Hybrid pricing accounted for 31.1% of contracts in Q2 2026, up 0.1 percentage point from Q1
- Hybrid leads net revenue retention: Hybrid-priced companies recorded 105% NRR in the 2025 benchmark, versus 102% for subscription, 100% for outcome-based, and 99% for consumption-based pricing
- Valuation multiples differ by model: As of April 2025, SaaS Capital Index companies using primarily usage-based pricing traded at 7.4x mean and 7.8x median revenue multiples, against 6.5x mean and 3.9x median for subscription peers, though L.E.K. cautions that the gap could narrow
Understanding the fundamentals of consumption-based pricing
Consumption-based pricing ties customer costs directly to measured usage rather than relying only on fixed fees or seat counts. Implementing the model requires reliable usage metering, billing logic to apply pricing rules, and transparent reporting so customers understand their charges. Orb's standard usage metering architecture retains granular raw usage events that can be queried for billing, corrections, historical analysis, and auditability.
1. 27% of companies below $1M ARR reported consumption- and outcome-based revenue in total ARR
High Alpha reports that 27% of companies below $1M ARR included consumption- and outcome-based revenue in total ARR. The figure shows that variable monetization appears even at the earliest revenue stage in the benchmark.
2. 20% of $1M to $5M ARR companies reported consumption- and outcome-based revenue in total ARR
High Alpha reports that 20% of companies with $1M to $5M in ARR included consumption- and outcome-based revenue in total ARR. This provides a second benchmark for variable monetization among early-stage SaaS companies.
3. Flat-fee subscriptions fell from 29% to 22% over the prior 12 months
In a 2025 survey of more than 240 software and AI companies, flat-fee subscriptions fell from 29% to 22% over the prior 12 months. The seven-percentage-point decline shows that fixed-fee subscriptions lost share among respondents as the mix of primary pricing models changed.
4. 24% of $5M to $20M ARR companies reported consumption- and outcome-based revenue in total ARR
High Alpha reports that 24% of companies with $5M to $20M in ARR included consumption- and outcome-based revenue in total ARR. Together with the adjacent ARR cohorts, the figure shows variable monetization appearing across company sizes rather than only at the largest SaaS companies.
5. Usage-based pricing was the primary model for 17% of surveyed companies in 2025
In Growth Unhinged's 2025 State of B2B Monetization survey, 17% used usage-based pricing as their primary model in Q2 2025. The same survey showed hybrid pricing at 41%, highlighting that many software companies were pairing variable charges with recurring components rather than relying on pure usage pricing alone.
Driving revenue growth with usage-based pricing models
Companies using consumption-based pricing showed stronger growth than subscription-priced peers in the 2025 benchmark data, while hybrid pricing led the same benchmark on net revenue retention. Aligning price with delivered value can open expansion paths that flat-rate models capture less directly.
6. Consumption-based companies grew 43% year over year
In the 2025 SaaS benchmark data reported by High Alpha, consumption-based companies grew 43% year over year. Consumption ranked second of the four pricing models measured. The result is consistent with the expansion potential of consumption pricing, although the benchmark does not establish that pricing model choice caused the growth difference.
7. Hybrid pricing rose from 27% to 41% over the prior 12 months
In the 2025 Growth Unhinged survey of more than 240 software and AI companies, hybrid pricing rose from 27% to 41% over the prior 12 months. The increase documents growing use of combined recurring and variable pricing components among surveyed companies.
8. Usage-based companies traded at higher revenue multiples in April 2025
In its April 2025 comparison, L.E.K. reported that SaaS Capital Index companies using primarily usage-based pricing traded at 7.4x mean and 7.8x median revenue multiples, against 6.9x mean and 6.6x median for hybrid companies and 6.5x mean and 3.9x median for primarily subscription companies. The median gap is wider than the mean gap. L.E.K. cautions that the premium may narrow as the model becomes more common, so the figures are best understood as a point-in-time comparison rather than a permanent valuation gap.
9. 40% of companies above $50M ARR reported consumption- and outcome-based revenue in total ARR
High Alpha reports that 40% of companies above $50M ARR included consumption- and outcome-based revenue in total ARR. The finding shows that variable monetization is present in a meaningful share of larger SaaS businesses, even when it is not the only revenue model they use.
10. Hybrid models led net revenue retention in the 2025 benchmark
Hybrid-priced companies recorded 105% NRR in the 2025 benchmark, the highest result among the four pricing models measured. The result places hybrid pricing first on this retention metric within the surveyed benchmark, without establishing causation.
11. 38% of $20M to $50M ARR companies reported consumption- and outcome-based revenue in total ARR
High Alpha reports that 38% of companies with $20M to $50M in ARR included consumption- and outcome-based revenue in total ARR. That result shows variable monetization is also present in the $20M to $50M ARR cohort covered by the analysis.
Teams evaluating pricing changes can use simulation tools to model pricing and customer impact using real product-usage data and compare scenarios before rollout, reducing the risk of pricing experiments.
Key metrics and analytics for consumption-based pricing success
Effective consumption pricing requires granular visibility into usage patterns, billing accuracy, and customer behavior. Without proper instrumentation, companies risk revenue leakage or customer disputes.
12. Seat-based pricing fell from 21% to 15% over the prior 12 months
In the 2025 Growth Unhinged monetization survey, seat-based pricing fell from 21% to 15% over the prior 12 months. The six-percentage-point decline documents a smaller share of seat-led primary pricing models among survey respondents.
13. Three in four surveyed software companies changed their pricing in the prior year
In the same 2025 survey, three in four surveyed software companies changed their pricing in the prior year. That level of change puts pressure on billing infrastructure to support pricing iteration without requiring a new engineering project for every adjustment.
14. 5% of surveyed companies used outcome-based pricing as their primary model in 2025, while 25% expected to by 2028
In the Growth Unhinged survey, 5% of surveyed companies used outcome-based pricing in 2025 as their primary model, while 25% expected outcome-based pricing to be their primary model by 2028. The gap between current primary-model use and respondents' 2028 expectations shows that monetization strategies are still evolving beyond traditional fixed-fee and seat-based structures.
Orb's standard metering path retains granular raw usage events rather than relying only on pre-aggregated totals, enabling historical corrections, historical analysis, and auditability. Its accuracy tooling can backdate price changes and backfill missing events when corrections are needed.
The impact of consumption-based pricing on SaaS business models
The shift to consumption pricing can affect multiple parts of SaaS operations, from product development to financial planning. Companies adopting the model need systems and processes that can support it effectively.
15. Per-usage pricing is the most common contract model in Vertice's dataset
Per-usage pricing represented 36.5% of contracts in Q2 2026, making it the single most common pricing model in Vertice's dataset, up from 34.0% in Q1. The result establishes per-usage pricing as the leading category in that dataset without implying a majority share.
16. Hybrid-pricing companies averaged 19% TTM revenue growth in L.E.K.'s analysis
In L.E.K.'s analysis of SEG Annual SaaS Report 2025 data, hybrid-pricing companies averaged 19% TTM revenue growth. This provides a growth reference point for hybrid monetization. Hybrid structures benefit from price modeling that can express platform fees and usage components in the same contract.
17. Per-user pricing fell to 32.4% of contracts in Q2 2026
Per-user pricing represented 32.4% of contracts in Q2 2026, down 2.6 percentage points from Q1. This decline directly documents the shift away from seat-led monetization in Vertice's contract data.
18. Consumption-priced software showed 37.6% average monthly budget variance in Vertice's analysis
Vertice found 37.6% average monthly budget variance for consumption-based models, compared with 19.8% for hybrid models and 4.1% for seat-based models. Vertice also found it takes less than six months for a consumption-priced contract to drift more than 15% from its original forecast. These figures reinforce the value of usage forecasting, spend alerting, and invoice explainability as operating controls for consumption pricing.
19. AI monetization still leans on subscription and hybrid structures
Among SaaS companies monetizing AI, High Alpha reports 53% subscription, 31% hybrid, 11% pure usage-based pricing, and 5% pure outcome-based pricing. AI monetization is therefore not synonymous with pure consumption pricing, and vendors whose pricing may evolve across these models benefit from billing systems that can support multiple structures without a rebuild.
Implementing flexible pricing strategies beyond basic metering
Modern consumption pricing extends beyond simple per-unit charges. Advanced approaches include dimensional pricing across multiple variables, prepaid credit systems, and hybrid structures that combine usage with platform fees.
20. Hybrid pricing accounted for 31.1% of contracts in Q2 2026
Hybrid pricing accounted for 31.1% of contracts in Q2 2026, up 0.1 percentage point from Q1. Hybrid structures combine a recurring component with variable charges that can scale with customer usage.
21. 23% of surveyed CIOs preferred hybrid pricing for AI applications
In the Andreessen Horowitz survey of 100 enterprise CIOs, hybrid pricing was preferred by 23%, combining seat, usage, and sometimes outcome-based components. This structure suits platforms where both user access and resource consumption drive value.
22. 39% of CIOs favor usage-based pricing for AI applications
In an Andreessen Horowitz survey of 100 CIOs across 15 industries, 39% favored usage-based pricing tied to tokens, API calls, or time, making usage-based pricing the most frequently selected option among the reported pricing categories. The survey covers how enterprises build and buy generative AI, so the preference is specific to AI purchasing rather than software buying generally.
23. 21% of surveyed CIOs preferred seat-based pricing for AI applications
In the Andreessen Horowitz CIO survey, traditional seat-based pricing was preferred by 21%, behind both usage-based and hybrid models. The finding is scoped to enterprise generative AI buying rather than software purchasing generally. Separately, per-usage surpassed per-user in Vertice's Q2 2026 contract data, which supports the narrower claim that per-user pricing lost share while per-usage pricing gained share in Vertice's dataset.
Companies implementing complex pricing can leverage price modeling capabilities to define bulk, tiered, PAYGO, and dimensional pricing, reducing engineering bottlenecks when pricing evolves. Orb's dimensional price groups support pricing across multiple usage dimensions, such as region, instance type, and environment, using a single pricing configuration for dimension combinations.
Streamlining financial operations for consumption-based billing
Consumption pricing can intensify challenges for finance teams, including revenue recognition complexity, variable cash flows, and reconciliation requirements. Proper finance workflows address these challenges systematically.
24. 61% of IT leaders cut projects because of unplanned SaaS cost increases
In the 2026 SaaS Management Index, 61% of surveyed IT leaders cut projects because of unplanned SaaS cost increases. The finding underscores the financial impact of unexpected SaaS cost increases and the importance of stronger forecasting and spend controls.
Financial controls matter for consumption models. Orb's enterprise controls prevent any edits to closed accounting periods and keep an immutable log of billing changes with timestamps and attribution, while native integrations with systems like NetSuite create standard NetSuite transaction records and reduce manual stitching and reconciliation.
Optimizing customer experience with transparent usage data
Customers need to understand what they are being charged for. Hard-to-trace charges can create disputes and reduce budget-owner confidence in the line item. Providing usage visibility and spend controls addresses these concerns proactively.
25. 78% of IT leaders faced unexpected charges tied to AI features or consumption-based pricing
In the past year, 78% of IT leaders reported unexpected charges tied to AI features or consumption-based pricing. Because the figure covers AI features and consumption pricing together, it reflects a cost-visibility and budget-control challenge across both, rather than a measurement of consumption billing alone.
This statistic highlights why spend controls and spend alerts matter. Customers need tools to monitor spend and receive alerts as they near spending thresholds. The Experience Kit provides pricing calculators, checkout flows, and advanced dashboards for planning, monitoring, and optimizing usage.
Real-world success in consumption-based billing
Orb's customer and enterprise pages report the operational improvements, transaction scale, and revenue growth highlighted below. These examples illustrate what billing infrastructure built for usage models can support.
Orb's published customer and enterprise materials report measurable results:
26. Vercel decreased time to build and launch billing for new products by 80%
Vercel decreased launch time by 80% for billing new products, showing how dedicated billing infrastructure can reduce the engineering effort required to monetize new products.
27. Stytch cut monthly billing time by 75%
Stytch reports that its team spends 75% less time per month on billing, reducing operational work associated with processing bills and invoicing.
28. Orb reports 40x Replit revenue growth since using Orb to monetize usage
Orb reports that Replit has seen 40x revenue growth since using Orb to monetize usage.
29. Supabase processes over 1.5M invoices per month through Orb
Supabase processes over 1.5 million invoices per month through Orb, demonstrating the transaction scale that a dedicated billing platform can support.
These outcomes are examples of what becomes possible when billing infrastructure handles the complexity of consumption pricing rather than requiring custom engineering for each pricing change.
Additional benchmark statistics by pricing model
30. Outcome-based companies grew 65% year over year
In High Alpha's 2025 SaaS benchmark, outcome-based companies grew 65% year over year, the highest growth rate among the four pricing models measured.
31. Hybrid-priced companies grew 40% year over year
In the same benchmark, hybrid-priced companies grew 40% year over year.
32. Subscription-priced companies grew 34% year over year
Subscription-priced companies grew 34% year over year in High Alpha's 2025 benchmark, trailing the three variable pricing models measured.
33. Subscription-priced companies recorded 102% NRR
In High Alpha's 2025 benchmark, subscription-priced companies recorded 102% NRR.
34. Outcome-based companies recorded 100% NRR
Outcome-based companies recorded 100% NRR in the 2025 benchmark.
35. Consumption-based companies recorded 99% NRR
Consumption-based companies recorded 99% NRR in the 2025 benchmark, providing a useful reference point alongside the subscription, outcome-based, and hybrid results.
Frequently asked questions
What are the main benefits of adopting a consumption-based pricing model?
Consumption-based pricing can align vendor revenue more closely with customer usage, which can enable expansion as usage grows. In the 2025 benchmark reported by High Alpha, all three variable models outgrew subscription pricing, with consumption-based companies at 43% year-over-year growth against 34% for subscription. Retention tells a different story: hybrid-priced companies led net revenue retention at 105%, while consumption-based companies were at 99%. As of April 2025, L.E.K. also found higher revenue multiples for primarily usage-based companies, while cautioning that the gap may narrow. Depending on packaging, consumption pricing can also lower the initial adoption barrier by allowing spending to scale with usage rather than requiring a larger fixed commitment.
How does consumption-based pricing differ from subscription pricing?
A fixed-fee subscription charges a recurring amount independent of measured consumption, whereas consumption-based pricing varies charges with usage. Fixed-fee subscriptions provide revenue predictability but may create shelfware or capture expansion less directly. Consumption models can align charges more closely with measured usage but require reliable metering and billing infrastructure to execute effectively. Many companies use hybrid approaches that combine elements of both. In L.E.K.'s analysis of SEG Annual SaaS Report 2025 data, hybrid-pricing companies averaged 19% TTM revenue growth.
What challenges can companies face when implementing usage-based billing?
Key challenges include accurate usage metering at scale, handling mid-cycle changes and retroactive adjustments, managing revenue recognition complexity, forecasting variable revenue, and providing sufficient usage transparency to customers. Custom billing systems can require substantial ongoing engineering investment, creating technical debt and operational bottlenecks as pricing evolves.
How can businesses ensure transparency for customers with consumption-based models?
Effective transparency requires usage dashboards, detailed invoice breakdowns showing event-to-charge lineage, spend alerts before charges exceed thresholds, and historical usage analytics. The goal is enabling customers to understand exactly what they consumed and how charges were calculated, which helps address the unexpected AI or consumption-related charges reported by 78% of IT leaders in Zylo's 2026 SaaS Management Index.
What role does automation play in managing complex usage-based pricing?
Automation is central to operating consumption pricing at scale. Depending on the revenue stack, this can include automated event ingestion and deduplication, usage aggregation, configurable pricing rules, invoice generation, and revenue recognition workflows. Without sufficient automation, finance teams can face manual reconciliation work that becomes harder to sustain as transaction volume and pricing complexity increase.