welcome to the londonbusinessblog.com Exchange, a weekly newsletter for startups and markets. It is inspired by the daily londonbusinessblog.com+ column from which it takes its name. Do you want it in your inbox every Saturday? Register here.
“It’s not based on usage or subscription pricing,” VC firm OpenView wrote in its second State of Usage-Based Pricing report. These hybrid approaches require new tools, but which ones? Let’s investigate. — Anna
Complex prices are rising
As we learned from OpenView’s latest report earlier this week, usage-based pricing is increasing, but not replacing other models.
Sure, more SaaS companies are billing their customers based on how they use the service. But this often comes in tandem with other pricing approaches, such as tiered plans.
OpenAI’s ChatGPT is the latest example of this hybrid pricing approach. In addition to the free tier, it introduced ChatGPT Plus, a fairly basic subscription model starting at $20 per month. But also the company said it was “actively exploring options for cheaper plans, business plans and data packages.”
Data packages: That would be a form of usage-based pricing, but one that wouldn’t replace subscriptions. This means that ChatGPT would join the growing range of complex priced products.