Understanding usage-based pricing in SaaS
Usage-based pricing represents revenue generated when a customer actually consumes your service, rather than paying a fixed fee.
Take the example of a communication API platform charging €0.0075 per SMS. An e-commerce customer sends 2 million messages and pays €15,000. The following month, with only 1 million messages, the bill is €7,500.
This flexibility is excellent for customers, but significantly complicates revenue recognition for your business.
The complexity doesn't lie in the mathematical calculations, but in managing the variability of usage patterns. This volatility makes forecasting revenue and cash flow much more difficult than in traditional models.
Main types of usage-based pricing
- Time-based pricing: Billing based on duration (virtual machines, meeting rooms)
- Consumption pricing: Prices linked to consumed resources (storage, API calls)
- Tiered pricing: Predefined tiers with fixed price per usage bracket
- Volume pricing: Decreasing unit price according to volume
- Pay-as-you-go: Real-time billing without commitment
Many SaaS companies adopt hybrid models combining multiple usage elements or with a base subscription.
Revenue recognition principles (ASC 606)
All publicly traded American companies must comply with ASC 606 (or IFRS 15). Key principles:
- Recognition after delivery: Revenue is recognized when usage occurs, not when the contract is signed
- Reliable measurement: A system must track usage accurately and in real-time
- Value alignment: Recognition reflects how the customer receives value
- SSP allocation: For bundles, revenue is distributed according to standalone selling prices of each element
How Hyperline automates revenue recognition
Hyperline is a modern revenue management platform designed for SaaS companies with usage-based pricing.
The automated ASC 606 process
Hyperline automates the 5 steps of ASC 606:
- Identify the contract - Automatic integration of customer data
- Identify obligations - Configuration of products and services
- Determine the price - Automatic calculation based on actual usage
- Allocate the price - Automatic application of SSP rules for bundles
- Recognize revenue - Real-time recognition during usage
Hyperline key features
- Data connection: Ingestion of usage data via database connectors (PostgreSQL, MongoDB, BigQuery), API or CSV - no code required.
- No-code configuration: Intuitive interface to create products and define complex pricing models, including usage-based, tiered, or hybrid.
- Automatic recognition: Automatic application of ASC 606/IFRS 15 rules with real-time recognition, deferred revenue tracking and automated journal entries.
- Real-time metering: Instant calculation of the correct price with complete visibility on each event, anomaly detection and total transparency.
- Native integrations: Connection with CRM (HubSpot, Salesforce), accounting (Pennylane, Xero, QuickBooks), payments (Stripe, GoCardless, Airwallex, Mollie) and data warehouses.
- Advanced reporting: Revenue breakdown by plan, product or period with real-time tracking of what is billed, collected and forecasted.
Challenges solved by Hyperline
- Measurement and counting: An unreliable tracking system creates risks of under-billing and non-compliance. Hyperline offers native metering with complete traceability and anomaly detection.
- Revenue forecasting: Usage volatility complicates forecasts. Hyperline provides advanced analytics that track what is billed, collected and forecasted in real-time.
- Audit compliance: Auditors require evidence of recognition based on measurable performance. Hyperline automatically maintains clear audit trails.
- System limitations: Traditional platforms fail with complex multi-attribute pricing. Hyperline is built specifically for these cases with its "usage-native" approach.
- Multi-currency: Hyperline supports multi-currency billing with compliant invoice generation in over 100 countries.
Why choose Hyperline
Key benefits
- 90% reduction in billing time: Complete automation eliminating manual work and external integrators. Implementation in less than a week vs months for legacy systems.
- Usage-native by design: Built specifically for usage-based pricing with raw data ingestion (API, CSV, database connectors) and automatic calculations.
- Automatic compliance: Application of ASC 606/IFRS 15 rules with real-time recognition, deferred revenue, automated journal entries and complete audit trails.
- Complete ecosystem: Native integrations with your existing tools - CRM, accounting, payments, analytics - everything stays automatically synchronized.
- Enterprise security: SOC 2 certified, GDPR compliant, ISO 27001 in progress. As a European company, all data is processed in accordance with EU regulations.
Complete quote-to-cash solution
- CPQ: Quotes, approvals and contracts with custom pricing rules
- Billing: Multi-currency, multi-language, tax compliance in 100+ countries
- Payments: Orchestration with Stripe, GoCardless, Airwallex, Mollie
- Analytics: Real-time reporting broken down by plan, product, region, period
Key figures
- Founded in 2022 by Lucas Bédout (former VP Engineering Spendesk) and Clément Garbay
- €13.6M raised from Index Ventures
- Over 150 clients up to €100M ARR
- 20x growth in 18 months
- Free trial available: Sign up and explore the platform in test mode, without commitment.
Conclusion
Revenue recognition with usage-based pricing presents unique challenges, but Hyperline solves them with complete automation, guaranteed compliance and real-time insights.
Focus on growing your business while Hyperline automatically handles your billing and revenue recognition in full compliance with ASC 606/IFRS 15.
Ready to simplify your revenue recognition? Discover Hyperline at hyperline.co