M3ter said it will use the funding to build on its early traction and meet the rising global demand for its product by growing its teams in Europe and the U.S.
London-based startup m3ter is exiting stealth mode today armed with $17.5 million in funding as it looks to tackle the challenge of usage-based pricing for software-as-a-service providers. The round was led by Kindred Capital and included participation from Union Square Ventures and Insight Partners.
M3ter aims to solve the difficulty of implementing usage-based pricing in SaaS products. Doing so is far from easy, especially for cash-strapped startups that are more focused on growing their businesses. Many SaaS firms opt for a simpler subscription-based pricing model. Yet m3ter says a usage-based model is far superior.
It points to a study by OpenView Advisors LLC that shows how SaaS businesses with usage-based pricing are growing at an average of 29.9% year-over-year, compared with 21.7% for other pricing models. That’s because usage-based pricing enables easier adoption of new products, costless upsell, better margin control and greater customer satisfaction, m3ter said. M3ter added that two of the world’s largest SaaS companies, Snowflake Inc. and Datadog Inc., have both switched to usage-based pricing.
It allows SaaS firms to carry out complex price configuration based on that data, calculating customer’s bills in real-time and feeding that information to the SaaS firm’s own billing and finance system as well as the customer’s own dashboard, so they can see how much they’re going to be billed at any time. M3ter also promises easy implementation with a flexible, application programming interface-based architecture.
“Usage-based pricing offers huge rewards for SaaS businesses, but it isn’t easy to implement. We experienced the pain ourselves when building our previous startup, but we also saw what good tooling can look like at AWS,” said Griffin Parry, Chief Executive.
M3ter has been operating in stealth mode up until now, but it already has a number of customers, including Redcentric Solutions Ltd., Sift Science Inc. and Stedi Inc., as well as a new partnership with the revenue delivery platform provider, Paddle.com Market Ltd.
M3ter said it will use the funding to build on its early traction and meet the rising global demand for its product by growing its teams in Europe and the U.S. The company also plans to build more advanced analytics tools for sales and finance teams.
