Amberflo: The Inevitable Rise of Usage-Based Pricing
Today we are happy to welcome Puneet Gupta to the show. Puneet is the CEO and Co-Founder of Amberflo.io and a former General Manager at AWS. From speaking with Puneet, we can say he sits in the top tier echelon of truly special entrepreneurs with a combination of intelligence, passion and focus on building a game-changing company.
In this interview episode, we discussed usage-based pricing as a business model and how companies can effectively measure and scale pricing once cloud metering is implemented.
Watch&Listen to the full interview episode here.
Puneet Gupta
Co-Founder&CEO at Amberflo.io
What is the problem Amberflo is trying to solve?
With the rise of cloud platforms, more and more businesses are shifting to the usage-based pricing and billing model pioneered by Amazon AWS. Companies need a new technology set to enable the transition to make a move. At Amberflo, we offer a cloud metering and usage-based pricing and billing platform that helps track, bill, and charge on usage.
Many companies have built a usage-based pricing and billing solution in-house. How efficient is that compared to having a turnkey solution built by a company like Amberflo.io?
If you look at the leaders and the early players in this area, companies like Twilio, Databricks, Snowflake, and MongoDB, all these platform-level companies have built usage-based models internally. These companies had no choice but to build it in-house because, at that time, there wasn’t anything like Amberflo’s solution available on the market. Building the solution internally, these companies have validated the model and showcased that the prior technology set was not working for usage-based pricing and billing.
Amberflo offers a next-generation platform for cloud metering usage-based pricing and billing for companies aspiring to adopt the usage-based model.
Our team has worked at AWS and saw the underlying technology needed to build and support it. We continuously add features to keep on with the trend and keep our customers ahead of the curve. And that’s the ultimate value of working with Amberflo versus building it in-house.
What is it about this model that is better for businesses? Why do you feel confident that this will be the dominant model?
Usage-based pricing eliminates the step functions in customer adoption and growth. Traditional models mainly have a variation of a starter plan, a professional plan, an enterprise plan, and a contact us plan. That’s the status quo today. There’s a step function where users have to graduate from one plan to the next. And often, companies put out these plans and do “feature gating,” where every new plan will get you additional features, but it will cost you twice as much.
Now contrast that with a usage-based, pay-as-you-go plan, where none of these step functions exists. The user pays for how much they use. And if they use more, they pay more. Now you, as a company, can focus on your products, ensuring that you’re giving your customers a great experience; whereas their usage grows, it’s seamless, and they continue to use more. You can take all the overhead cycles and the people doing custom contracts and management, divert those resources, and put them back into the product to deliver an excellent user experience.
At Amberflo, we are confident that the usage-based model will dominate. And AWS growth is an excellent example. We can see the tremendous growth of AWS and how seamlessly their model can scale. They would have turned it back if this model had an inherent structural problem. Though, for over fifteen years, AWS hasn’t had to change the model fundamentally.
Puneet, how did your experience at AWS help you think about pricing software?
I credit a lot of my learning experience to my time at AWS. I was fortunate to be there in the early days of cloud computing and AWS itself, building foundational blocks of the business model of usage-based pricing and billing. This model was an eye-opener for me. That organic growth, the frictionless adoption, is where the dots connected for me. And when I said to you earlier in the interview that we fundamentally believe this will be the dominant model, it is only a question of when. It’s not a question of if. There’s nothing more mature than you pay only for what you use. You cannot go wrong with that. And once you overcome your anxiety about that aspect, it works like magic.