m3ter’s John Griffin on Revolutionizing Customer Value and Revenue Growth

00:00:03:06 - 00:00:28:16

Ben Hillman

Picture yourself at a lively farmer's market where vendors display a cornucopia of fresh produce, treats and other goods, each with their own unique price tag. From the kettle corn stand to the Papoose area, the most successful vendors understand their customers needs and adapt their pricing strategies accordingly. Those are the best pricing strategies. Draw in more patrons and boost their sales.

00:00:29:02 - 00:00:53:21

Ben Hillman

But the pricing strategy for one selling sweet treats may not work as well for one, selling fresh vegetables. Now imagine that this lively farmer's market is, in fact the SaaS marketplace. Companies offering their software services must choose the right pricing strategy to attract customers and maximize their revenue. And we're talking more than just undercutting the competition of your fellow vegetable stand.

00:00:54:09 - 00:01:24:11

Ben Hillman

In recent years, usage based pricing has emerged as a compelling option allowing customers to pay for what they actually use. Fostering trust and increasing customer satisfaction. Enter John Griffin, CRO of m3ter, an expert in usage based pricing who has honed his skills through years of experience and success. John sat down with Neal Dhesi at SaaScoc 2020 to to demystify this pricing strategy and share his invaluable insights.

00:01:24:21 - 00:01:47:21

Ben Hillman

John will ensure that you can harness the power of usage based pricing to drive your SaaS business to new heights. From Paddle, it's Protect the Hustle, where we explore the truth behind the strategy and tactics of B2B SaaS growth to make you an outstanding operator. On today's episode, John Griffin talks to Neil Desai about usage based pricing. They talk about seeing pricing as a design problem.

00:01:48:03 - 00:02:13:12

Ben Hillman

Best Practices. When preparing for scale buying signals, John sees app m3ter predictability and retention with usage based pricing and implementing usage based pricing and go to market motions. After you finish the episode, check out the show notes for an in-depth field guide focused on understanding music based pricing. Then when you're leaving your five star review of the podcast, tell us what resonated most about the advice John had to share.

00:02:17:22 - 00:02:23:00

Ben Hillman

First up, John and Neil talk about seeing pricing as a design problem.

00:02:27:08 - 00:02:40:21

Neel Desai

So, John, we're going to talk we have a lot to talk about today. Everything from m3tered billing, pricing strategies, pod and whatnot. I'd love to get some quick context into how'd you end up here? Like, why are you working on this? Right. What's your background and how did m3ter even get started?

00:02:40:21 - 00:03:02:16

John Griffin

Okay. And so I hope I don't take the too long way around this. By way of background of a data engineer, I'm into data I basically are pretty passionate about, and I spend a lot of my early career working there, ended up getting into sales or whatever, but round about 22 I was working for a UK systems integrator and we were building out the online TV portfolio for a lot of UK companies like BSkyB, Channel four on Demand, ITV, people like that.

00:03:02:16 - 00:03:24:13

John Griffin

And I came across his legendary fellow called Griffin Parry, became a good friend of mine, and we built out our TV company together and then we decided we would set up a company together with another guy called Gabriel Page, and we set up Game Sparks back in 2013. And the reason we went from there from a media company was is that James was I guess, had a lot, a lot in common with the kind of media systems we built previously.

00:03:24:14 - 00:03:41:23

John Griffin

Griffin I found, as it were, Gabriel Page It was an Irish company that was based in both Dublin, sorry, was an Anglo Irish company based in both Dublin and also a York in the U.K. The connection with that company and the reason it's even relevant is because we deployed usage based pricing and we learned about how hard all of that was.

00:03:41:23 - 00:04:01:01

John Griffin

And we kind of made every single mistake that you can make with usage based pricing. Now that company, you kind of its primary go to market was a plug motion combined with usage based pricing. So it grew super quick, like we got thousands of thousands of customers really fast. Now, not all of them paying Uber amounts of cash, but it started growing fast.

00:04:01:01 - 00:04:23:05

John Griffin

We got a lot of customers that were using that motion and then IWC bought us. We kind of got an opportunity to then within the IWC family, I think they're the vanguards there, the leaders and usage based pricing. You know, those and a couple of others like Snowflake, Twilio, etc. AWP has really set the standard and there was a whole bunch that we got to learn from how they did usage based pricing internally and we were bought early as well.

00:04:23:05 - 00:04:46:23

John Griffin

So, so basically Griff and I, we had a kind of craving or a draw to go again and it kind of just suddenly dawned on us that what we learned most about usage based pricing, IWC was teaching us how to do it properly, that if we were going to go again, let's pick in this really gnarly problem. Let's take what we learned from IWC with this kind of revenue operating system that they have and let's take it out to market because we could see the usage base pricing was a significantly growing trend.

00:04:46:23 - 00:04:48:23

John Griffin

And so that's how we got into it. That's why we're here.

00:04:48:23 - 00:05:09:01

Neel Desai

That's awesome. I feel so up paddle in a profit. Well, we've been talking about pricing and packaging for nearly a decade now and I feel like we are limited by the tools our industry has to offer. So for so many years we like the things we've wanted to do on our pricing page, whether it's a pricing model, how we bring these to markets, we're limited by just like, you know, what a stripe offers or what is our offers by the tools, our industry.

00:05:09:01 - 00:05:34:15

Neel Desai

So I'm excited to talk to you to learn more about like what m3ter is doing to actually enable founders to unlock a bunch of new billing motions. Right. I think our industry is going through this moment of like we've defined bogey, but no one is just Balaji. But there's a hybrid models. Koji Sales assisted, perhaps usage based, but even within usage based, just in summary base and tiering and all of this, how do you think about when you have companies come to you and say, Hey, we are thinking about transforming our pricing into a usage based model?

00:05:34:15 - 00:05:36:15

Neel Desai

Where do you even start? What does that mean to you?

00:05:36:16 - 00:05:59:14

John Griffin

Guess the first problem that everybody encounters with kind of transforming their pricing model is a design issue. And I think, you know, m3ter is a platform. It's not really a consultancy, So we're not really the pricing experts per se. I mean, you've got basically your own founder, Patrick Campbell, Now he's a absolue pricing guru. We also partner with a bunch of guys like James Wood from Inside Partners are a whole bunch of other people from Simon Couture background.

00:05:59:14 - 00:06:19:15

John Griffin

But the very first problem everybody encounters is a design problem. And, you know, pricing is generally a hard thing to do to design correctly. Simplicity tends to basically be the right route for most people to take, but that is very much the first thing that people encounter. Most of the time we on board with people that already know they want to deploy a consumption based pricing model.

00:06:19:15 - 00:06:41:05

John Griffin

And so very likely they're likely to have come across the first challenges associated with that. And that's really where it kind of m3ter comes into its own. The first problem that everybody has is getting significant volumes of data in whatever format it is created or generated from the various things that they're trying to measure and get that into a kind of format that they can apply measurements or pricing metrics to.

00:06:41:05 - 00:06:58:19

John Griffin

But that's the first problem we solve. We provide a very, very open platform for them to define exactly the type usage data that they want to send. And we're able to do that at huge scale. So that's the other thing that kind of catches everybody by surprise is sometimes the volumes of data you're talking about is really, really significant.

00:06:58:19 - 00:07:17:13

John Griffin

And so it's not everybody that can apply rating in near real time to 100 billion events coming out you really fast. So that takes specialist software skills. And so a lot of our team came out of U.S. states significant experience of building these big scalable systems that were able to basically do that kind of thing. So so that's problem number one.

00:07:17:13 - 00:07:36:14

John Griffin

I think problem number two is really basically being able to integrate with other pricing mechanisms that you may already have in your company. A lot of people will have significant investments in the deal desk or a CRM platform or CPQ platform like Salesforce or whatever. They may want to maintain that ability to kind of keep their sales teams using those systems for the purposes of pricing.

00:07:36:14 - 00:07:53:06

John Griffin

Basically, one of the challenges with sovereign meetings are we've got to play very, very nicely with those kinds of platforms. We've got to integrate with them really well. We've got to allow them to basically ingest pricing into into the beta platform in order to be able to apply the rating. So integrations is and is a is a significant part of basically what we have to do after that.

00:07:53:06 - 00:08:10:05

John Griffin

You know, I think one of the key differences between us and say some of the other players in this area is that we really saw the whole thing as a data problem. So it's really about ingesting usage data and then forecast data. And then on a binding it with pricing data from other systems and being able to basically solve the problem of, say, for example, billing or spend calculation really efficiently.

00:08:10:05 - 00:08:27:17

John Griffin

So one of the things that we kind of saw very upfront was the fact that this is a really gnarly data problem. And so we invest quite heavily in the ability within our company to basically process data both in terms of engineering but also the analytical opportunities that that are waiting for you after its what you could do with all of this usage data.

00:08:27:17 - 00:08:47:11

John Griffin

It emanates signals that basically it can help your sales team increase their revenue by maybe up to 30% or something like that. So we've invested heavily in the kind of tools to be able to take all the signals that come from this usage data and trigger alerts and things like that to sales teams such that they can respond to patterns.

00:08:47:11 - 00:08:56:08

Ben Hillman

Next Gen talks about best practices when preparing for scale.

00:08:56:08 - 00:09:21:06

Neel Desai

One thing I was thinking about as you were highlighting the three things there was like, This isn't your first rodeo. You've seen firsthand the challenges of having data at this scale can bring in. What are some of the things you're doing upfront this time around to prepare for that scale? Maybe if other founders are starting on a similar business or a product that they know, like the data challenges imminent, like what do you, what are some best practices, if any, come to mind around like preparing for that scale?

00:09:21:07 - 00:09:34:15

Neel Desai

Because I think for a lot of companies you get to that stage and by the time you realize that the problem is too late and you spend six months refactoring everything, and by then you've missed out on something else, right? So any advice for folks on, on on the earlier end on like what to do beginning.

00:09:34:15 - 00:09:52:17

John Griffin

Yeah, it's a tough one, isn't it? Because like, say for example, our first time around we didn't go the kind of significant kind of VC funding, right? We we kind of raised money from a few other kind of resources like angels and things like that. When you do go the VC route, what you've done here, you definitely have got access to more capital.

00:09:52:21 - 00:10:15:01

John Griffin

So you kind of start off with a bigger vision from the very beginning that basically we're going to build a big machine here. We are going to lead this particular area around usage based pricing. And so everything we've done has been without intent in mind. And so everything from your hiring, you hire great people. You don't hold back in that your hiring plans are probably a little bit more aggressive than you'd like them to be.

00:10:15:01 - 00:10:37:04

John Griffin

It's it's tough. It's a risk operationally. I mean, thankfully, a lot of our team, as I said, came in from IWC, so there was a lot of skills to be able to design a platform operationally that was going to scale up to what we intended to do. But similarly in the organization side, we brought in great people from the very beginning that could go out and attract the talent that we needed to attract and basically organizationally grow in the same way we are operationally.

00:10:37:04 - 00:10:54:21

John Griffin

And so then, you know, the big risk is you're going to take a product to market. We have to go through the same challenge everybody else does, and we'll have we build something that the market wants. Thankfully, the early signals are that, yes, we built something fantastic and so we're getting customers through at a great rate. So that's really where you got to manage that balance, is that we want to bring on great people.

00:10:54:21 - 00:11:08:04

John Griffin

You want to keep on doing that operationally. You want to be best in class. That's how your customers are going to demand from you. And then you got to keep winning those customers, which is really our kind of job and the go to market part of the company. And so it's a challenge, but you just set out with that intent in mind.

00:11:08:04 - 00:11:21:05

John Griffin

So if this advice for people that are basically following, I think it's yeah, just all side of that, like I'm going to go one life, go big or go home with no one, I think that's terrible. Not everybody should do that. But for many people, that's the path they're going to take.

00:11:21:05 - 00:11:37:20

Neel Desai

No, I think that's that's helpful. And like being intentional or right around intent. Intentional. Right. And I think that's what I'm trying to say is like the reverse of what that is. And for some it's a big venture backed business. For others, it's a bootstrapped side project. But being clear around what that outcome you want will help drive.

00:11:37:20 - 00:11:41:11

Neel Desai

Do I take money? How much? When? What are the people I'm hearing so on and so forth. Right.

00:11:41:11 - 00:11:46:23

John Griffin

It wasn't only 2%. I mean, it's it's all right. I think it's all about hiring people, hiring the right people, hiring. Well, speaking.

00:11:46:23 - 00:11:59:22

Neel Desai

Of hiring, how do you think about that in this market? I mean, it's we're always constrained where everyone has constraints from a resourcing perspective and finding how do you how do you try like what's the value proposition that you pitch to recruit great people?

00:11:59:23 - 00:12:15:15

John Griffin

I think the first part of that question is, is how do we feel about hiring right now? I think like everybody else, responding to this kind of dip in the world's economy and stuff like that, we're very conscious that we've got to keep our foot on the gas. We're going ahead, we're putting the foot on the pedal and and we're running out.

00:12:15:15 - 00:12:34:00

John Griffin

The problem when we think it's the right time to do that, we are a lot earlier stage than you guys were two years old at this point. Kind of taking your foot off the gas is the wrong move for the business. Thankfully, you know, we've got enough resources behind us. And so, for example, we're just about we're just go through the process of stepping up our recruitment in North America and building a North American team.

00:12:34:00 - 00:12:54:19

John Griffin

So we were very consciously just kind of keeping the foot on the gas. And one doesn't want to be careless. But thankfully, you know, you monitor very closely the rate at which you're acquiring new customers and things like that. You look at all of these things on a daily basis and you make decisions based on that. And so right now I believe we should just keep going.

00:12:54:19 - 00:13:04:03

Ben Hillman

And now John talks about buying signals he sees at m3ter as well.

00:13:04:03 - 00:13:29:03

Neel Desai

And it's good that like you're well resourced to kind of accelerate during that time. Right. I want to circle back to usage of his billing at Paddle. We talk a lot about this like ethos of doing it for you or doing it for our customers. And I think we've been partners for a little while now. And I think one of the ways that Beta stands out is like providing the tooling it takes a lot of the what, two or three years ago would have been five engineers doing manually off their plate in a really easy to use scalable platform.

00:13:29:03 - 00:13:52:04

Neel Desai

First question I had was like one quarter trends you're seeing in usage based billing, both with your current customers and what good things that your customers are asking for within this broad kind of world of like transitioning from a perhaps, let's say, feature based or a standard perhaps like value metric to a consumption or user base model who is doing really well right now and like, what are some of the trends that we should be mindful of heading into next year?

00:13:52:04 - 00:14:19:04

John Griffin

Yeah, So I think there was a couple of parts to the question in terms of who's doing really well. I mean, a lot of the companies that we've seen go public and we get insights into their actual numbers have done extraordinarily well with usage based pricing. And so those are the pin up children, you know, the snowflakes of the world, the willows, the data, dogs, stripes, and, you know, those are some of the pin up children that usage based pricing and some of the things that basically really stand out as the kind of net dollar retention that they're able to achieve.

00:14:19:04 - 00:14:39:13

John Griffin

I think the figure that I heard from Snowflake, at least one of the last set of results that we looked at was something like 158%. Okay. Which means that if they do nothing, they're getting 58% growth year on year. And so that's one of the major advantages of deploying pricing models like this. They generally tend to land are lead to better net dollar retention.

00:14:39:13 - 00:14:56:17

John Griffin

So all of those pin up children like the Twilio is Datadog. Snowflake says that they're doing a lot of our advertising for us. The trends that we're therefore seeing are that as soon as companies basically get to about the kind of 20 million plus they are, they really start thinking about their pricing and take it a lot more seriously.

00:14:56:18 - 00:15:15:22

John Griffin

Many of them are switching towards it. So I think in 2021, our understanding from I think Kyle Poyer, who you add up here earlier was that 34% of SaaS, B2B SaaS companies are deployed usage based pricing. I think that's growing by at least 11% year on year. And I think in these recessionary times, I do not see any reason for that to slow down.

00:15:15:22 - 00:15:38:22

John Griffin

There's a whole bunch of things driving it. So the desire for better kind of economics for your business are probably one, the significant drivers, But there's a whole bunch of companies that also have to because their end customer isn't any longer a person or the person using their software. It's another piece of software, you know, with automation and the API economy and then with the spread of AI and ML, these are real driving forces that are going away just because we're in a recession.

00:15:38:22 - 00:15:57:10

John Griffin

So I think we're pretty confident that the adoption of usage based pricing for all of these reasons is going to continue for the long haul, particularly as companies, as I said, get to 20 Millionaire and above. I think they really need help doing in an earlier part of your question asks about the kind of effort that it took to kind of roll out this type of pressing pricing previously.

00:15:57:10 - 00:16:21:21

John Griffin

There's another B.C that's very active in the sector in the States, and so we got some figures off them. They did a big survey and they were able to show that companies trying to roll out a company of about 100 million air spends about 500 K minimum to try and launch usage based pricing, and then it costs them about 300 grand on a kind of recurring basis year on year, not a ton of investment for for those companies.

00:16:21:21 - 00:16:44:07

John Griffin

And so there's a evolution now, a platforms like m3ter that have come about that really simplify that problem. Hey, look, it's a gnarly problem. There's no getting away from it. So we simplify, but it's it's an investment. It's investment across the whole company. But it platform like m3ter really, really, really simplifies that journey. And I think one of the ways we simplify is because we tend to help companies approach the problems they're going to face in sequence.

00:16:44:07 - 00:17:05:01

John Griffin

So the first problem everybody has after remember, we talk about pricing design. So LiDAR, I guess helps a lot less with the the overall design of pricing than it does with the second problem, which is operational billing. So that's a first kind of gnarly problem we help our customers with. We just get that stood up and help customers launch 100% automated error free billing year in year.

00:17:05:05 - 00:17:21:08

John Griffin

But as soon as they solve that, what happens next? They need everybody to be able to see the data. When they say everybody, they need their sales department to be able to see what customers are using their platform, what signals are coming off the the data. What does it tell you about the buying potential for a particular customer?

00:17:21:16 - 00:17:40:13

John Griffin

And all of this data is coming straight off the usage. Okay. And it gives you so many signals. Like I literally think our goal, our mission is 30% improvement on sales revenues because of buying signals that are emitted from usage data by people that are on them, other people that need the data, your customers need the data. Of course, they log on to dashboards.

00:17:40:13 - 00:18:03:14

John Griffin

They want to see exactly how much they're spending. They want predictability, being able to forecast a customer spend based on their usage is an important characteristic. Who else needs a data customer success? They're all the time having to put up a billing queries from customers, not just technical queries, but billing queries. Why did you build me this? So customer success needs to be able to see that data finance needs to be able to see the data because they base their forecasts off the back of it.

00:18:03:15 - 00:18:09:01

John Griffin

So anyway, that's probably totally getting off track here as one does on these types of things.

00:18:09:01 - 00:18:15:04

Neel Desai

But yeah, tell me more about these signals that you guys generate. What what does that mean in a practical sample?

00:18:15:08 - 00:18:34:02

John Griffin

But basically, generally your customers usage isn't just a nice, beautiful linear thing that just goes month and month, and that's 2%. Generally you get a lot of like spikes in usage and you get basically are slowdowns, God forbid. And so these things all tell you basically what you need to know as a salesperson in order to be able to respond to it.

00:18:34:03 - 00:18:50:11

John Griffin

Now, the other thing I'd say, and it's really one of the biggest trends that you see in usage, but it's been kicking around for a while is, is that nobody really deploys usage based pricing any longer without the equivalent kind of credit system. Our prepayments model, our commitments are there's all kinds of different versions of minimums and things like that.

00:18:50:11 - 00:19:07:22

John Griffin

Now when customers on a prepayment, you can literally use this data tells you how fast they're burning that off. Now that tells the sales rep basically what they should be selling to the customer in the next buying cycle. If your customers using up a prepayment commitment to fast as a sales guy, I'm going to call them up and I'm going to get a bigger commitment.

00:19:08:02 - 00:19:30:21

John Griffin

I might offer them a lower rate just to make a bigger commitment next time to me, and that helps the companies mirror are helps me as a sales rep or earn my commissions anomaly detection. If a customer does spike in usage that that's by the way a problem that happens a lot and clouds like eight of us and Google or whatever consumers get a nasty sticker shock when they basically see their usage just goes up, fold their like they could churn.

00:19:30:21 - 00:19:45:03

John Griffin

So what you want to do as a wrap is you want to get ahead of that. You want to call the customer and go, don't worry about it, don't worry about it. I would shave like 30% off this for you if you just make this commitment to me for another 12 months or something like that, everybody wins. The customer feels okay about it.

00:19:45:12 - 00:19:51:23

John Griffin

Okay. In the end, the rep feels great about it and the company gets more predictable, more air from the customer.

00:19:54:22 - 00:20:01:20

Ben Hillman

Next up, John and Neil talk about predictability and retention with usage based pricing.

00:20:04:20 - 00:20:20:17

Neel Desai

I was going to ask about that because one of the things I've noticed are people on a high level concern about or nervous about in a usage based model is predictability on both ends. Finance teams want to know how much are going to make or is going to pay if a company isn't on top of it like you just described, they can be really, really challenging.

00:20:20:17 - 00:20:30:00

Neel Desai

How do you think about that? Both like from a retention perspective? Because when I want to calculate my and RR and is usage based, I kind of know, but I don't really know, right? How like, how do I go about one.

00:20:30:00 - 00:20:49:19

John Griffin

Of the kind of objections that I guess a lot of people put forward about adopting usage based pricing both for you as a supplier and for your customer. It doesn't wash with me completely from the customer side of things because usage based pricing is so popular because it aligns value with what a customer pays so well. And that is really the purpose of a pricing model.

00:20:49:19 - 00:21:07:03

John Griffin

And so customers want to pay for what they use, they want to pay for it at the best possible rate. Predictability is very much a second concern now. It's an important concern. So don't get me wrong, but there are lots of ways that you can make models more predictable for them. Once you've decided, hey, you're on a model that better aligns with the value you got.

00:21:07:03 - 00:21:27:08

John Griffin

So that's point number one. Okay. But once you've got this, there's lots of things you could do. So one of the things is you can use the data you get to forecast accurately, okay, way more accurately than you could do, because again, with a lot of usage data, there's a lot of signal and that does allow you to apply more accurate linear regressions than you could have basically done with not having usage data in the past.

00:21:27:08 - 00:21:46:22

John Griffin

So I don't know how you forecast accurately a business that doesn't have those detailed usage data, but my God, with a lot of usage data, you get a lot better forecasting, but that's only part of it because the other end of it is these additional commercial models put in place minimum commitments, put in place prepayments, and suddenly the business gets as predictable.

00:21:46:22 - 00:22:09:14

John Griffin

Overages aren't as good for you. They don't count as RMR. So as a sales team, you're constantly trying to look for ways to engage your customers and get them to not click into overages. So you should make overages slightly painful for the customer. Overages are bad, but you use them in a kind of creative way to tease them up into a slightly better commitment or prepayment the next time.

00:22:09:14 - 00:22:31:11

Neel Desai

That makes a lot of sense. I feel like the other departments that support the billing motion right case support product all have to shift their strategy to to support a use. It's not just like the rails and the pricing model. Right? I think to your point, we're relying on like the entire customer lifecycle and all these other partner teams to do their part to enable and support a positive and invaluable customer experience, Right?

00:22:31:11 - 00:23:00:05

John Griffin

Yeah. I mean, you hit the nail on the head, really. I think the the most significant difference between now and the old days was that when your customer signs the contract, that's the very beginning of your relationship with them. They can get up and leave at any point in time. But hopefully the combination of your product and the plug motion you've got in place and the usage based pricing, which is kind of like the you know, the pricing equivalent appeal is in some ways hopefully that ends up being making the whole thing stickier and so that they're not leaving Europe, they're not turning.

00:23:00:12 - 00:23:21:17

John Griffin

So really your relationship just begins at the point you sign a contract. So after that, your customer success probably becomes their most important department. Is our customer success? Zero. Yep. They become your most important department because what they're really responsible for doing is helping adoption and they're helping penetration of the product and making sure the customers are getting using the product in the best way they can, all of that kind of good stuff.

00:23:21:17 - 00:23:28:11

John Griffin

And I think the dial up and the focus on that kind of capability has really increased with the roll out of usage rates. Pros unpeeled it. Well, the reason.

00:23:28:11 - 00:23:36:16

Neel Desai

I love that is because the business makes more money when the customer uses the product more and they use the product more when they get more value from the product, right? So it aligns.

00:23:36:16 - 00:23:53:20

John Griffin

The alignment is just part of everything. Yeah, yeah, yeah. And that's why it's so sticky, I think, you know, that's why become so sticky now you've got to watch out because, you know, there's the World is full of stories about finance directors getting huge builds over time from companies that they're paying in a usage based business. I mean, the eight of us know all about this.

00:23:53:20 - 00:24:12:08

John Griffin

And then there are swirling statistics about the amount of, say, services that are being paid for on a monthly basis, but they're not actually used in a production capacity. So I think what's really important to do is to be able to show your finance team a direct correlation between customers, both on acquisition, on what they're using and the spend that you've got.

00:24:12:10 - 00:24:32:16

John Griffin

One of the ways we help out with that is we actually we also ingest cost data, which, you know, you don't see an awful lot of other people in this area doing so. We allow our customers to ingest cost data as well as usage. And so what you could do then is you could present a kind of uniform view to the finance department that basically shows why you've got these WAC cloud costs or GCP or whatever it is.

00:24:32:16 - 00:24:47:03

John Griffin

And so you show great alignment between the margins that you're getting from your customers. The span that they're having, and then your own cost base. And that makes the whole thing just basically far more palatable for a CFO that's looking to cut costs.

00:24:47:03 - 00:24:56:23

Ben Hillman

And now John talks about implementing usage based pricing and go to market motions.

00:24:56:23 - 00:25:28:05

Neel Desai

Something I've been thinking a lot about is I feel like usage based billing has had PLG as a tailwind in helping more and more companies drive adoption. And in reverse, it's pods gotten easier when you can align product usage with the actual billing motion. Where do you see SaaS heading? I don't know. Five years from now, obviously we're going to have more usage based on the nod, but are we having like is the PLG commercialization misguided in that it's just the way that customers buy, not necessarily how they get value or like how do you think about the evolution of how we buy B2B sales?

00:25:28:05 - 00:25:50:17

John Griffin

And here's a controversial thing. I don't think it can just all be about PLG. I think PLG and that whole kind of go to market motion is incredibly important. But the future of SaaS generally will be where one needs both motions. I don't see an enterprise sales motion going anywhere fast. I think the best companies and the most successful companies are the ones that basically deploy both kind of go to market motions.

00:25:50:17 - 00:26:14:13

John Griffin

And you know, we called up barbell, so we will do that on m3ter. And interestingly enough, we decided to bias the enterprise sales motion and the partner led motions before our both self-service. The reason being that our ICP was particularly, it's a large organization that are probably making a hundred million RR the sales cycles they require, you know, professional enterprise sales motions that have existed of age.

00:26:14:13 - 00:26:36:22

John Griffin

I think a lot of companies have become totally reliant on PLG motions where they've got really good product. I think like IWC is a classic example of this. They are excellent APL gymnasiums. You could argue that those sales teams in there, they've been spearing fish that have jumped into their boat for quite a long time. Are they as good at the kind of very competitive, hard to do enterprise sales?

00:26:36:22 - 00:27:01:16

John Griffin

Do they know what a champion and a potentially buying customer is? Do they know how to go about winning one? I worry about that. What I would say to answer your question directly, is the future in sciences. Those two motions living in tandem South companies in general need to make sure they're as good at both. And I don't think the fact that you have usage based probably I think usage based pricing as a kind of pricing design or philosophy is as useful an either motion.

00:27:01:16 - 00:27:16:23

John Griffin

So there's no kind of bias towards one or the other there. I will also just out there's one last point. I don't think usage very pricing is going to be everybody. I mean, if i sell h.r. Software like there's a few of them kicking around the show. I can't see that. Not selling by number of employees for quite a long time.

00:27:17:00 - 00:27:24:03

John Griffin

You know, i think the subscription models are going to persist. I think there's going to be hybrids. Yeah. Just a lot more usage based pricing going forward.

00:27:24:03 - 00:27:30:17

Neel Desai

Love it. Well, thanks, John. If people want to find more about you or m3ter or any other usage based billing, where should they go?

00:27:30:17 - 00:27:49:14

John Griffin

Well, we've got a great Web site called m3ter dot com, and it's with the three, by the way. So it's not the shredder, it's it's m3ter. So we can go to meetup.com. And actually we invest heavily and do a lot of content marketing just to help the industry generally understand about, you know, why usage based pricing and then what are the challenges and how to overcome those.

00:27:49:14 - 00:28:08:18

John Griffin

So there's a lot of good advice on there. So that's where I recommend people go. And also tip the hat to Carl Poyer and OpenView. He's written the SaaS playbook for usage based pricing, and I think that's a remarkable good read. But if you go to Metuchen and you go to the kind of content section, there is a kind of list of all of those things that everybody should read, I would strongly recommend you go there.

00:28:08:18 - 00:28:13:03

John Griffin

Thank you very, very much. It was a real pleasure speaking to you.

00:28:13:21 - 00:28:38:04

Ben Hillman

Now you're enlightened to the usage based pricing strategy. Today, we talked about seeing pricing as a design problem. Best practices when preparing for scale buying signals, John sees that m3ter predictability and retention with usage based pricing and implementing usage based pricing. Go to market motions, make sure to get protect the hassle a five star review and tell us what lesson John taught you from today's episode.

00:28:38:10 - 00:28:48:12

Ben Hillman

Thanks for listening. Subscribe to and tell your friends about Protect the Hustle, A podcast from Paddle Studios dedicated to helping you build better sets.