Usage-Based Pricing and CAC - The calculation impact is significant

On this episode, Dave "CAC" Kellogg and Ray "Growth" Rike discuss in detail how Usage-Based Pricing (UBP)  impacts the calculation of Customer Acquisition Cost and it's efficiency derivatives including CAC Ratio and CAC Payback Period.

They discuss the three primary different types of Usage-Based Pricing Models including:

• Pure usage-based or consumption-based pricing with no minimum commitments

• Minimum commitment agreement that includes up to #x units and then overage $/unit over the minimum

• Annual Subscription agreement to the platform and a $/unit of usage in addition to the annual subscription

Each of the above models can impact what is consider Annual Recurring Revenue (ARR), Variable Recurrring Revenue (VRR) and/or pure variable revenue - and that will accordingly impact the CAC efficiency metric calculation methodology.

If you love the nuances and details of SaaS Metric and how emerging GTM models impact traditional metrics calculations - this episode is for you!