Seat-Based vs Usage-Based Comparison
Compare the long-term revenue trajectory of per-seat pricing vs metered pricing. Usage models often align better with value and grow faster.
Seat-Based
Usage-Based
Revenue Projection (Annual)
Growth Trajectory
The ceiling vs the sky.
Year 3 Gap
By Year 3, Usage Revenue is projected to be $39,546 vs Seat Revenue $15,972.
Alignment
Usage pricing aligns your revenue with the customer's activity. If they grow, you grow.
Friction
Seat pricing creates friction to adoption (sharing logins). Usage pricing reduces friction (unlimited seats).
Execution Steps
Enter starting metrics for Seat model (Seats, Price, Growth Rate).
Enter starting metrics for Usage model (Volume, Unit Price, Growth Rate).
The chart projects Annual Revenue over 3 years.
Observe how the steeper growth curve of usage (if applicable) overtakes linear seat growth.
Pro Strategy
- If your product is productivity software (CRM, Slack), Seats make sense. If it is infrastructure/automation (API, AI), Usage is better.
- Consider a hybrid: Platform Fee (Seats) + Usage Fees to get stability and upside.
- Usage growth rates typically outpace headcount growth rates significantly in successful tech companies.
Core Concepts
Value Metric
The unit you charge for. It should correlate with the value the customer gets. Seats are often a poor proxy for value in automation/AI tools.
Shelfware Risk
In seat-based models, customers buy seats they don't use, leading to churn risk. Usage models ensure they only pay for what they value.
Upside Cap
Seat revenue is capped by headcount. Usage revenue is uncapped and can grow 10x even if the team size stays flat.
What is Seat-Based vs Usage-Based Comparison?
This forecast model compares two growth functions: Linear (or slow exponential) headcount growth vs faster exponential usage growth. It highlights the 'crossover point' where usage-based pricing becomes superior.
Best For
- • Choosing a pricing model for a new product.
- • evaluating a pivot to PLG (Product Led Growth).
- • Forecasting revenue for investors.
Limitations
- • Assumes constant prices (no volume discounts).
- • Simplified annualization.
Alternative Methods
Hybrid Model
Combining both.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
Cypress.io
Seat pricing limited adoption.
Switched to test recording limits.