M3ter comes out of stealth to solve the issue of usage-based pricing for SaaS.

Organizations have been using Software as a Service (SaaS) for years. These organizations pay the service provider based on a subscription of the SaaS solution, simplifying their business processes. This can become difficult for organizations just starting up with very little capital.

M3ter, a London-based startup, has just come out of stealth mode with $17.5 million in funding to tackle the issue of usage-based pricing.

How does usage-based pricing work

Service providers need to merge data with commercial terms to enable usage-based pricing. This would allow the user to have up-to-date product usage and pricing information. However, this method is not standard because service providers need to create customized software for each client, which can be costly and time-consuming.

To avoid all the hassle, service providers have opted for a subscription model which weighs heavy on clients forcing them to pay whether or not they use the service.

M3ter argues that although implementation may be complex, the benefits outweigh the challenges. A service provider can adopt new products, offer costless upsell and improve margins and customer satisfaction with this method. To present as an example, Snowflake Inc. and Datadog Inc. are both using a usage-based pricing model and have seen great success.

M3ter promises help

M3ter has created a unique infrastructure that allows systems to capture granular cost and usage data at scale. This will enable SaaS firms to calculate price configuration based on that data, simplifying the calculation of customer bills in real-time. Furthermore, it will transfer this information to the firm’s finance system and the customer’s dashboard, offering complete payment transparency. M3ter ensures easy implementation with a flexible, application programming interface-based architecture.

M3ter might be on its way to solving the most prominent issue faced by startups looking for SaaS solutions without worrying about going over their budget.