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Business Marketing


Could switching to consumption based pricing supercharge your sales

  • Written by Carl Warwick, Regional Sales Director Asia Pacific and Japan at BillingPlatform

With businesses and consumers looking to contain costs, suppliers that can offer them greater choice and control over their spending will flourish.

A new calendar year is fast approaching and all signs suggest it will bring with it a super-sized suite of challenges for Australian businesses. The prospect of navigating stubbornly high inflation, rising interest rates, worsening geo-political instability and slowing demand is hardly a cheery one – and experts have warned things may get worse before they get better.

Deloitte Access Economics has forecast our local economy will grow by just 0.9 per cent in the 2023-24 financial year, down from an average annual rate of 2.4 per cent in the previous decade.

The picture is even grimmer when the effects of population growth are excised from the equation, with economic activity per capita in 2025 expected to remain stalled at 2021 levels.

Customer cutbacks

Attracting and retaining customers will be an urgent imperative for businesses that seek to maintain sales and profitability – and it will be no easy undertaking. The cost of living crisis has forced millions of Australians to start pulling their belts in – tightly – and both discretionary and essential spending are now under the microscope.

More than two thirds of individuals under 50 say the rising cost of living is their greatest source of stress, while 55 per cent of those aged 15 to 29 had experienced some form of financial hardship, including not having enough money for an emergency, in the previous three months, according to survey data published by NAB Economics in July 2023.

The big squeeze has prompted people to become more engaged with their finances, by embracing digital budgeting and savings tools and seeking greater insight into their spending.

Local businesses have become equally prudent; reducing their spending in a variety of areas, including human resources, ICT equipment and marketing.

Paying only for what they need

A sobering outlook? Yes, undoubtedly. But today’s tough times may represent a golden opportunity for suppliers that are willing and able to overhaul their traditional revenue models.

Switching from fixed to consumption-based pricing, for example, can give your customers greater control over their outgoings, by allowing them to pay only for what they use or access.

From telecommunications and music streaming to scooter and vehicles sharing services, Australians are already comfortable with the concept of accessing, rather than acquiring, goods and services, in both the commercial and consumer spheres. They’re increasingly open to obtaining more of the things they need and want in this way because doing so can deliver flexibility and cost savings.

Yes, it may be a very different modus operandi for businesses like yours but it’s not without its benefits; chief among them the cash flow predictability that recurring revenue can provide. There’s also the opportunity to forge stronger connections with your customers, courtesy of the fact that contact will occur continuously, rather than on an ad hoc basis when they’re preparing to make an outright purchase.

Tools that make the task easy

But while adopting a consumption-based pricing model may be an attractive pivot for your enterprise, it can be difficult to execute in the absence of technology that enables you to bill customers promptly and accurately for the products and services they access.

That’s where cloud-based revenue management software comes into its own. Smartly implemented, it becomes critical digital infrastructure – enabling technology that provides comprehensive quote-to-cash support for whatever consumption-based pricing model, or models, you decide to introduce.

Invest in a revenue management platform that connects seamlessly with your CRM software and you’ll be able to monitor the popularity of your new pricing model and manage your customer base at a granular level.

All the better if your chosen platform incorporates a sophisticated data analytics function, as you’ll also have the capacity to generate actionable insights that can be used to modify your offering for maximum customer appeal.

Striving for sales and growth in all sorts of times

It’s often said that challenge and opportunity are two sides of the same coin. Today’s tough economic conditions represent a golden opportunity for Australian businesses that are willing to think outside the square and experiment with alternative revenue models.

Offering customers the option to utilise consumption based pricing may give your enterprise a vital edge over its competitors, provided you have revenue management technology in place that allows you to track and charge for the goods and services they access, easily and accurately. If maintaining growth and profitability is a priority in 2024, it’s an investment you’d be well advised to consider.


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