At Mereo, we are proud to share insights from distinguished voices across the B2B ecosystem. In this guest article, we welcome Eric Cohan, founder of Shoal Creek Solutions and a seasoned procurement expert. With decades of hands-on experience leading enterprise sourcing strategies and navigating complex vendor negotiations, Eric brings a pragmatic, buyer-centric lens to today’s evolving pricing models. His perspectives challenge conventional thinking and empower leaders to drive greater alignment between value creation and spend.
In part one, “Is Your Pricing Model Holding You Back? 4 Appealing Benefits Consumption-Based Models Offer B2B Buyers,” we explored the rising appeal of consumption-based pricing from a buyer’s perspective.
This is a model where buyers pay only for what they use, offering increased flexibility, lower entry costs and simplified procurement. While this approach can better align spend with value, it also introduces budgeting unpredictability and governance challenges for your buyers. Understanding both sides of the equation can help you position offerings more strategically and support smarter buyer decisions.
But how could consumption-based pricing affect your business? As more selling organizations explore this dynamic model, it is important to also understand what this model means for sellers. Read more for the pros and cons of this pricing model.
PROS OF CONSUMPTION-BASED PRICING FOR YOUR ORGANIZATION
- Easier Buyer Onboarding
The lower financial commitment of consumption-based pricing often enables selling organizations to secure new buyers more easily. Reduced buyer resistance leads to faster acquisition and broader reach. It is a win-win. - Revenue Growth Tied to Buyer Success
This model creates alignment between buyer usage and seller revenues. As buyers realize value and expand usage, revenues grow accordingly — making it another win-win for both parties. - Simplified Product Mix Management
When buyers pay based on usage rather than selecting fixed packages, sellers avoid the inefficiencies and inaccuracies of predefining complex product mixes. Buyers naturally gravitate toward the capabilities that create value, and the billing aligns with real usage.
SELLER CONS OF CONSUMPTION-BASED PRICING
- Sales Compensation Challenges
Traditional sales compensation structures are tied to upfront commitments. Under a consumption-based model, sales teams may struggle to receive timely commissions if revenues accrue slowly over time. This shift may require redefining incentive structures — potentially on a monthly or quarterly basis — and resolving territory ownership for ongoing consumption. - Dependence on Implementation and Customer Success
Revenue realization now depends heavily on the speed and success of implementation. Sales teams may find their earnings dependent on customer success teams’ performance — an interdependency that introduces new organizational tension and requires tighter alignment across departments. - Reduced Buyer Commitment and Engagement
Without a significant upfront investment, buyers may be less motivated to ensure successful implementation. If internal challenges arise, there is less financial impetus for buyers to push through adoption hurdles, increasing the risk of churn or stagnation. - Surprise Costs Can Erode Trust
When buyers exceed their expected usage, they may react negatively to higher-than-anticipated bills. This can damage the vendor relationship, provoke renegotiation requests, or lead to delayed payments—undermining forecast reliability and long-term satisfaction.
MAKE A SMOOTH TRANSITION FOR SKYROCKETING PERFORMANCE
A successful transition to consumption-based pricing hinges on evolving compensation models, fostering strong post-sale implementation, and supporting buyers through proactive usage analytics and engagement.
As this model becomes more mainstream, B2B leaders who embrace the nuances — and proactively adapt their internal strategies — will be best positioned to thrive.
Are you ready to navigate consumption-based pricing and overcome the top seller pitfalls? Let’s talk.