As companies and their customers grow and mature, the ability to provide a price that works for everyone becomes increasingly important. However, maintaining a grasp on which customer has been offered what, when, where, and how long for becomes increasingly complex, especially when usage-based or linked pricing comes into effect. For some companies, this is so important that they have dedicated internal resources to build and maintain their own pricing and billing engines. However, typically it’s not what developers joined a company to do, and it isn’t really driving the value of the business forward, but it is fundamental in allowing the company to do business. Even then, the sprawl of different pricing agreements and arrangements can be hard to manage internally and it can lead to over or under-billing - a situation where one side of the equation always loses.

Enter the next generation of pricing and billing engines looking to give companies the flexibility to price as needed to drive customer and company value without getting tied up in knots.

Whilst the need to solve this challenge grows as a company grows, the desire to rip out the software that gets a company’s revenue in the door decreases. Given this, we have seen two core strategies be effective as companies come to the market: (1) land with a smaller business and grow with them or (2) partner with an existing solution to enhance it and grow within the company over time as trust builds.

These strategies lend themselves best to the different types of approaches we see in the market. On the one end of the spectrum is the metering intelligence providers that focus on capturing precise and accurate usage data in order to facilitate billing as well as providing other insights. This is a perfect addition to an existing billing solution that may not have the native capabilities to track usage-based pricing. With this type of go-to-market the company can also serve larger companies where the complexity of mapping usage and utilisation is likely to be more urgent, however willingness to entrust the full money-driving machine to a challenger is lower. On the other side of the spectrum are solutions looking to provide an end-to-end pricing and billing engine focused on, for example, providing a mechanism to push through pricing changes end to end more easily. Here, entry into a smaller and earlier customer base is more likely to be efficient, and then growing with the customer, embedding and integrating into other core systems like ERP and CRM.

A common frustration we hear from customers of all sizes is integration of the billing system with other core systems. This maps back to the same two core strategies either needing (1) product roadmap to build out a full end-to-end solution, balancing deep product in critical modules with lighter touch modules catering to price sensitivity particularly in smaller customers, or (2) tight integrations with other modules in the billing value chain as well as the wider software stack such as ERP and CRM.