“Simplifying Consumption-Based Billing: The Impact of OpenMeter on Enterprise Monitoring”

In enterprise software-as-a-service (SaaS), usage-based pricing, a pricing model in which customers are charged only when they use a product or service, is gaining ground. According to a report from VC firm OpenView, ~60% of SaaS businesses offer some form of usage-based pricing today. But while usage-based pricing has its advantages, it can be tougher to keep tabs on from a billing perspective. There, he ran into blockers collecting usage-based pricing data from different providers and infrastructure and aggregating and analyzing this usage together. “Competitors in the usage-based space only cater to the revenue teams with a closed-source, billing-first approach,” he said.

In the world of enterprise software-as-a-service (SaaS), a new pricing model is taking center stage: usage-based pricing. This strategy charges customers only for the product or service they actually use. As reported by VC firm OpenView, around 60% of SaaS companies currently offer some form of usage-based pricing. Even major players like Apigee, Google Cloud’s API management platform, and Autodesk, a giant in vertical software, have recently made the shift to this model.

While usage-based pricing has its advantages, it also presents some challenges from a billing perspective. Many companies that use this model struggle with accurately tracking and billing their own customers for their usage-based products.

“This is a new challenge for engineers, as they need to build a real-time infrastructure to put cost control in place and integrate usage data with product and revenue teams,” explained Peter Marton, co-founder and CEO of OpenMeter, in an interview with TechCrunch.

Marton, who previously worked as a staff software engineer at Stripe, experienced these challenges firsthand. He saw how difficult it was to collect usage-based pricing data from different providers and infrastructure, and then aggregate and analyze that data together.

To address this issue, Marton teamed up with András Tóth, a former Cisco software engineer and his former colleague at RisingStack, a software development firm. Together, they launched OpenMeter, a platform for metering customer usage of apps.

OpenMeter, which is built on Apache Kafka, an open source toolkit for handling real-time data feeds, processes “usage events” across a company’s tech stack. It then translates these events into human-readable consumption metrics, which are sent to billing and finance dashboards, as well as customer relationship management databases for product and revenue teams to review.

Besides just tracking and reporting usage, OpenMeter also has the ability to enforce usage and rate limits. It also offers the option for usage-based or hybrid pricing, giving companies more transparency in their billing practices.

“OpenMeter is designed for engineers and offers a composable architecture to process real-time usage data and control cost,” Marton stated. “Enterprise companies choose OpenMeter for its composability. It’s hard to replace decades of monetization infrastructure at once, so we built a solution that engineering teams can incrementally adopt.”

But OpenMeter is not the only player in the metering game.

Here are some other companies addressing metering dilemmas:

  • Metronome: Recently raised $43 million for its software that helps companies offer usage-based billing
  • Amberflo: Building tool sets to transform SaaS pricing with metered usage
  • M3ter: Furnishes SaaS businesses with usage-based pricing solutions

So what sets OpenMeter apart from the competition? For starters, it is open source. This means that OpenMeter’s software is freely available to use, with paid options for enterprises that prefer managed plans. Marton also suggests that OpenMeter is more affordable than its competitors, although exact pricing is still being determined.

“Competitors in the usage-based space only cater to revenue teams with a closed-source, billing-first approach,” Marton explained. “OpenMeter focuses on the new generation of AI companies.”

In its early stages, OpenMeter has already achieved some success, raising $3 million from Y Combinator (which incubated the company), Haystack, and Sunflower Capital. Although Marton would not reveal the names, he states that OpenMeter has “multiple” market-leading AI companies as customers.

“The economic downturn has prompted companies to have tighter control around spending, making it necessary to understand per-user cost and enforce usage quotas. At the same time, revenue teams need to find actionable insights in usage data to identify new revenue streams,” Marton concluded. “This has created a tailwind for OpenMeter.”

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Max Chen

Max Chen is an AI expert and journalist with a focus on the ethical and societal implications of emerging technologies. He has a background in computer science and is known for his clear and concise writing on complex technical topics. He has also written extensively on the potential risks and benefits of AI, and is a frequent speaker on the subject at industry conferences and events.

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