I work at an IT service provider that also offers some cloud products.
Customers start out by wanting all the flexibility (for their devs, usually) to spin up their owner servers, and want used-based billing. It would be a waste to pay more, no?
Then their own book keeping department yells at them, because they use SAP, and every bill that differs from the contract or the previous month is sheer hell and requires 5 levels of approval / justification / whatever.
So the next iteration is that they buy a fixed contingent of "cloud points" per month so that the invoice remains constant, and there's reporting and/or a firm (but often unwritten) promise from the account manager that they'll notify the customer if/when they ever run the risk of exceeding their contingent.
In really big / inflexible companies, it really seems to be easier for the purchasing managers to justify higher but constant prices than variable prices. The inefficiency boggles the mind.
> "cloud points" per month so that the invoice remains constant
So true. At one point Google Ads had a BillingCap enum in their APIs, used to set up "capped actuals", a scheme also known as "monthly with rollover". Something that I understood as selling monthly quotas of a consumable, or as you put it, "cloud points".
My notes points to: https://developers.google.com/ad-manager/api/reference/v2019... . But this URL is broken and I can't find any trace of "capped actuals" anywhere in Google's documentation. I guess it was probably rebranded/refactored into budgets/monthly spending limit/monthly invoicing/whatever.
At the end I think "points" is a better way to sell this feature. If this is generic enough, it can be an answer to airlines' miles and similar loyalty programs the retail industry is fond of.
This is really what we've observed indeed!
The companies catering to later stage companies prefer to offer prepaid credits to their end users, or annual plans paid in advance that includes some prepaid usage than a full, non predictable usage based pricing.
I think in that case it's preferable for the end user, but also for the company, as their finance team can have more visibility on the upcoming revenue streams.
Customers start out by wanting all the flexibility (for their devs, usually) to spin up their owner servers, and want used-based billing. It would be a waste to pay more, no?
Then their own book keeping department yells at them, because they use SAP, and every bill that differs from the contract or the previous month is sheer hell and requires 5 levels of approval / justification / whatever.
So the next iteration is that they buy a fixed contingent of "cloud points" per month so that the invoice remains constant, and there's reporting and/or a firm (but often unwritten) promise from the account manager that they'll notify the customer if/when they ever run the risk of exceeding their contingent.
In really big / inflexible companies, it really seems to be easier for the purchasing managers to justify higher but constant prices than variable prices. The inefficiency boggles the mind.