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Shifting to usage based billing and compensation?

What do you need to take into consideration when moving to a usage based billing experience?

For comp plans- what should we be looking out for? what factors should be considered?

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    • A couple points on the curve about the companies I know with usage-based billing:
      -There is a quota around initial contract value (or ‘initial MRR’) to ensure things don’t close at $0. In some cases, there is also a target on growth of usage to hit a target usage-based billing quota.
      -In all the cases I am personally familiar with, the salesperson receives commission on everything the customer is billed for 12-months after the close.
      -Some companies do commission based on expected MRR and have a claw-back if the customer’s usage doesn’t hit that. I’m not a fan of this approach.

      Looking forward to keeping tabs on this thread. It’s a great topic, and can be complicated to set up comp plans, track & report on commission, build sales models, etc.

    • – 12 months of billing, after the contract signature or any event defined by each company
      – Minimum volume billed to be eligible
      – Easier done on revenue, but I’ve seen it based on the margin
      – Accelerators once when hitting a defined threshold

    • So much easier operationally to do it based on top line revenue, but it’s much better to do it based on margin/profit.

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