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?
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?
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.