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Usage, Not Users: Why user-based pricing is dead

The per user pricing model is a relic of the past. Today's businesses need a modern solution that works the way they do.

Why should every SaaS pricing page charge according to usage, not users?

Pretend you’re in the market for a new car. 

The sales rep at the dealership mentions all the good stuff: safety, mileage, brake assist, and extra cup holders.

“But hang on,” you say. “There’s only one seat. Where are the rest?”

“Those cost extra,” the rep says. “We reconfigure your monthly repayments depending on how many seats you need.”

“Every month? That sounds tedious.”

“It’s standard practice with our cars. Our buyers drive alone most of the time.”

“What if they need to pick up the kids, drive grandma to the airport, or go on vacation?”

“Easy — they just swing by and we add or remove extra seats.”

If you were the buyer, would you agree to those terms?

I’m willing to bet you’d go somewhere else.

And yet, charging per ‘seat’ — i.e. per user — is what the software world has done for decades.

Problems with user-based pricing

Where did user-based pricing come from?

Since the early days of software, charging per user was the standard way to price software products.

The results were predictable: longer buying cycles caused by hesitant companies who don’t want to buy the wrong software.

Procurement teams are forced to initiate lengthy RFP processes to reduce risk and get the best bang for their buck.

Lengthy RFPs. So much fun.

User-based pricing also hampered flexibility. You got charged per seat even if key people left the organization or outside partners needed temporary access.

“Our partners only log in once a month — it’s not fair to charge them full price.”

This forced companies to keep a close eye on who had access to their tools.

Some companies circumvented the pricing rules by simply creating shared logins for everyone — which hampered data security.

“Let’s just share the login. We know it’s less secure but this pricing is insane. First name: New York, Last name: Office. They’ll never know.”

You also got charged even if someone only needed a small part of the tool, like Tom from accounting who just needed to generate a CRM report.

“It doesn’t make sense for Tom to have an account just to view reports.”

Ultimately, many software systems never got adopted within organizations. 

The teams who needed access to the tool got blocked from getting it due to cost constraints.

“Sure, it would be nice if the customer success folks could see the timeline, but I’m not asking my boss to fork over full-price user licenses for it.”

User-based pricing led to hundreds of apps becoming ‘shelfware’ — apps that sat on the shelf and went unused for months.

There had to be a better way.

MTU Calculation Formula

Usage, not users: Fairer billing through MTUs

At FreeAgent CRM, we believe in usage, not users, as a better way to price CRM software. With usage-based pricing, only pay for what you use — nothing more. 

This means you can share access to your FreeAgent subscription with as many people as you like — everyone from Steve in Sales to Maddy in Marketing.

But how do we track usage in FreeAgent CRM? We use a metric called MTUs: Monthly Transactional Units. 

We calculate MTUs by adding up your total record updates, page views, and external API calls.

MTU = Record Updates + Page Views + External API Calls

This way, if you don’t have a lot of records or do a lot of CRM work, you don’t get hit with a huge surprise bill.

For most teams just getting started with a CRM, you can get great value at 500 or 1,000 MTUs. 

And we offer an amazing $29 deal for 500 MTUs or $49 for 1,000 MTUs. 

That’s one flat rate for unlimited users and Apps.

The benefits of usage-based pricing

Usage-based pricing confers many benefits to small businesses.

Instead of creating a 300-page RFP to ensure a tool works for you, you can simply buy and implement it and measure the impact on your workflow.

If it’s working for your team, you scale the tool’s use. If it’s not working, you simply end your subscription.

No weird contracts designed to lock you in for months.

How does usage-based pricing benefit FreeAgent?

Usage-based pricing makes sense for everyone involved — including us.

Our running costs are directly related to the number of monthly transactional units we process.

This means we only pay for storage, bandwidth, and security costs based on usage by our customers.

That way, it doesn’t matter whether a company has 10 or 10,000 employees — they’ll only pay for their usage. 

And by baking a small profit margin into each MTU, we still make money.

Win-win.

Plus, as you scale and add more MTUs to your package, you get better discounts — which improves your CRM ROI.

And because we’re big on automation, you can save money by automating your business workflows to use fewer MTUs.

We pass on those savings to you.

User-based pricing is dead. Say hello to usage-based pricing

Small businesses are routinely forced to choose between improving their workflow (by adding pricy user seats) or saving on costs.

At FreeAgent, we don’t believe such a decision should be either/or. It should be usage, not users.

It’s time to stop the waste of per-user pricing. Software companies shouldn’t meter access to information within an organization. 

Everyone who needs access should be able to get it freely.

FreeAgent is the first CRM that gives you unlimited users, lets you build unlimited apps, and charges you only for usage.

This is on top of it being dead easy to use, built for operational visibility, and able to fully integrate with other work apps.

Try FreeAgent CRM today. You’ll see the difference right away.

Mo Shehu

Mo Shehu

Mohammed Shehu, Ph.D. writes on marketing, content, and tech for B2B brands. You can find him online @shehuphd everywhere.

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