Alvaro Morales and Kshitij Grover worked together as technical leaders at Asana for five years, during a time when the company was undergoing major changes in pricing and packaging. The initiatives were painful for both the engineering and finance departments, they say. It was then that the couple realized they wanted more flexibility over how software-as-a-service (SaaS) products were billed and monetized.
“We found it counterintuitive that billing tools often limit and dictate what teams can try,” Morales told londonbusinessblog.com in an email interview. “They should instead provide the flexibility to meet customers where they are.”
To achieve (or at least try to achieve) this flexibility, Morales and Grover are co-founders Orb, a pricing platform that helps businesses automate different types of billing: based on usage, subscriptions, or a combination of the two. Orb revealed today that it has raised $19.1 million so far in Series A ($14 million led by Menlo) and seed ($5.1 million led by Greylock), which Morales says is being used for customer acquisition, go-to-market and R&D efforts.
“The trend towards usage-based pricing has accelerated in recent years, as has the hype around it. [But] there is no one-size-fits-all approach to pricing,” said Morales, who serves as CEO. “We like to think of Orb as a combination of an analytics product and a billing product to create a new approach that offers flexibility and allows for experimentation. Orb gives businesses a single source of truth that can link every unit of product use to revenue.
As for Morales’ earlier point, it’s certainly true that more SaaS companies are moving to usage-based pricing. In a 2021 OpenView study, 45% of SaaS companies said they use usage-based pricing, up from 34% in 2020. Twilio, Strip, and Plaid are among the major middleware companies that count on usage, while Shopify, Slack, and HubSpot are among the large application companies that have chosen the model.
Orb performs a range of billing tasks, including collecting and measuring product usage data, billing customers, and generating revenue reports. Within the platform, users can model alternative pricing plans and orchestrate changes in real time, leveraging product usage insights to find revenue opportunities.
Orb can be used to plan future price changes for customer cohorts or contract renewals. Meanwhile, on the billing side, companies can directly embed draft invoices into product billing portals – uncover overdue invoices and attempt to automatically recover failed payments.
“Orb gives businesses the control and flexibility to monetize any pricing model, without the expense of building it yourself,” said Morales. “We aim to keep prices moving with the pace of product innovation.”
Orb competes with several other SaaS billing automation players, such as Zenskar, which provides a platform for businesses to generate bills across a variety of pricing plans. There’s also Metronome, a startup developing billing and data infrastructure to process data at scale, and m3ter, which focuses on usage-based customer scenarios.
For its part, Orb, which launched publicly today, claims to have high-profile customers including Airbyte, Dune, and Materialize. Morales wouldn’t reveal the size of Orb’s customer base or any revenue figures, but he said – apparently anticipating growth – that Orb plans to double its 14-person workforce by the end of the year.
“There are players that have emerged as point solutions that specialize in usage-based metering, but point solutions pose an operational challenge because revenue data is fragmented across multiple systems,” Morales continues. “The end users include the multiple stakeholders at any company dealing with pricing and billing, with engineers, product managers, revops and financial controllers actively using Orb to make business decisions.”
Saam Motamedi, a general partner at Greylock who led Orb’s seed round, had this to add via email: “SaaS companies need to drive sustainable and profitable growth and need solutions that deliver value without additional seats or active use. Coupled with the AI and machine learning driven automation revolution, the cloud economy has accelerated. The speed with which software companies can develop monetization will distinguish the winners. We see Orb as a key to unlocking the value for the next big wave in software.”
Orb’s other San Francisco investors include Base Case Capital, Scribble Ventures, South Park Commons, FOG Ventures, Essence VC, Data Community Fund, the Cannon Project, and SV Angel, as well as individual angel backers.