What It Means (Simple Explanation)
User-based pricing means customers pay based on how many users or seats they have. The more users they add, the more they’re billed. It’s one of the simplest and most common SaaS pricing models.
Example
A company pays $20/user/month. If they have 10 users, their monthly bill is $200. Add five more users? The bill adjusts to $300.
Why This Matters (To SaaS & Finance Teams)
This model scales directly with user engagement and team growth. It’s easy to explain and sell. But tracking it manually—or without system enforcement—leads to billing gaps and missed revenue.
Ordway helps automate user-based billing by syncing license counts with invoices, usage data, and revenue schedules inside its billing platform.
How It Works (Break It Down Simply)
- Customers sign up with a user count (or add users later)
- Each user has a set monthly fee
- Billing adjusts as user count changes—automatically or on the next cycle
- Usage feeds into revenue recognition and MRR
You grow when your customers grow.
Common Headaches
- Manual tracking of user count
- Discrepancies between app user count and billing
- Customers gaming the system by deleting/reactivating users
- Confusion about bill increases when teams scale fast
Ordway’s CRM and SaaS product integrations and billing logic make this cleaner and more predictable.
Best Practices
- Use system-driven license tracking (not manual entry)
- Show seat counts and charges clearly on invoices
- Set rules for minimum user count or thresholds
- Align billing with contract terms (monthly, annual)
- Audit user usage vs. billing regularly
When to Use User-Based Pricing
Best for tools where the value obtained is closely linked to the number of users on the platform —like productivity, CRMs, communications, file sharing, and office apps. Works well when customer teams grow over time.
KPI Impact / What It Affects
Ties directly to expansion revenue, NRR, MRR expansion, and churn. Easy to model, but needs automation to scale cleanly.
Tip from the Field
Ordway’s Subscription Billing Guide walks through best practices for pricing by seat, managing plan upgrades, and enforcing limits cleanly across finance, product, and sales.
FAQ Section (Quick Answers to Real Questions)
What is user-based pricing?
Customers pay based on how many named users login to the application.
Is it the same as per-seat pricing?
Yes—just different wording.
Can I cap user counts or set minimums?
Yes, but be sure your billing systems can enforce it.
How do I track user changes?
Use product data or integrations with identity systems.
Want to Go Deeper?
See how Ordway supports flexible user-based billing and real-time usage tracking. Request a demo or check out the Subscription Billing Guide.
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