Usage Based Pricing III - Orb
Let's explore usage-based pricing strategies! Today, let's dive into what that means and another company operating at the cutting edge of it!
Happy Friday everyone! I hope you’ve had a nice week and are preparing for a fun, exciting, joyous weekend.
Before continuing our journey to learn about usage-based pricing, I want to touch on something incredibly exciting that I had the pleasure of attending the other day. Every year, Northwestern University has its premier startup pitch competition that is open to undergraduate students, MBA students, JD students, MD students, and the list goes on. Each year, 25 semi-finalist teams are selected for VentureCat and they then go through an intensive prep program, pitch training, further business development, and so much more. The program culminates with 5 finalist teams being selected along with 1 wild card team for the public event. On Wednesday of this week, those 6 teams pitched their visions, goals, and businesses while competing for a pool of over $325,000 in non-dilutive funding. Going to attend the event in person or even watching it virtually is amazing, it really shows how diverse and deep Northwestern’s startup community truly is.
I want to give a shoutout to two of the teams that pitched in the finals on Wednesday…first, Noah Edelman who’s working on The Neuron. I read the newsletter every day and love what the team at The Neuron is building. They know that AI is going to be massive and they’re helping others learn so they don’t fall behind. I know Nnoah pretty well and he’s just a stone-cold builder and creator, so I’m excited to see what. he continues doing with The Neuron. The second person I’d like to mention was actually the winner of the VentureCat grand prize. Charlotte Oxnam, who I don’t know as well as I’d like is the founder of Cue the Curves. Cue the Curves is the plus-size shopping app. Charlotte gave a phenomenal pitch and I was beyond blown away. One of the beautiful things about The Garage at Northwestern. is the physical space that students go to and can connect in. When I say Charlotte is always there working, I mean it — an incredibly well-deserved winner of the VentureCat grand prize.
That turned out to be. a bit of a longer detour than I expected, but all good things…without further ado, let’s continue our adventure through learning about usage-based pricing and discussing Orb.
Orb is the modern pricing platform to bill for seats, consumption, and everything in between. Right off the bat, let’s dissect the entire Orb workflow to help put things in perspective. As we discussed, much of the work that goes into enabling usage-based pricing is data ingestion to ensure the integrity of charging customers properly. After that, there are a handful of things that usage-based billing platforms do both similarly and differently…but for Orb the steps look as follows:
Usage Tracking - Orb’s scalable data platform enables it to ingest real-time events for customers to track the usage of their product/service
Billing - Orb allows customers to tap into its billing infrastructure, create flexible pricing models, and define what they want for their usage model (per seat, any seat, usage rate, etc.)
Invoicing - to help customers close out their billing cycle, Orb offers dynamic and transparent billing infrastructure to enable faster payment collections
Reporting - the last portion of Orb’s primary offerings lies in the creation of detailed financial reports to tie product usage to revenue
Among these various steps in the workflow, Orb’s platform is meant to be used and accessed across an organization’s entire employee stack. Initially starting with the engineering and product teams to implement usage tracking, shifting to sales and revenue operations teams for billing and invoicing, and then tapping into finance, customer success, and C-suite teams for invoicing and reporting.
As we’ve talked about as well, the main catalyst for a revenue model like this lies in experimenting with pricing models and usage definitions to unlock new revenue and identify what maximum revenue really looks like. Orb understands that and has built-in experimental features for teams to quickly build out new pricing plans, forecast them based on proprietary business data, and then implement those changes easily. On top of that, making those customized pricing plans has never been easier nor more accessible than with Orb. Within the platform exists effectively an in-house development environment to allow engineers to create custom metrics, adjust pricing, and so much more.
Having heard so much about usage-based pricing models over the past handful of days, one of the questions you may be asking yourself is how this specifically operates across different industries. With Orb, they’ve outlined a handful of common industries and their respective potential pricing structures…
Cloud Infrastructure - Orb allows companies within this industry to employ a consumption model in which they track metrics across network, storage, and compute power and tap into cloud marketplaces to allow for easier integrations with existing platforms
Fintech - Orb allows fintech companies to enact a transactional business model for pricing by automating calculations for complex pricing models (i.e. payment volumes, reconciled transactions, etc.)
Data - Orb’s platform for data companies turns to prepaid and postpaid options to ensure the best outcome and define custom metrics to prove that the new model is working…although data is tricky, Orb simplifies it
AI - Orb’s platform aligns pricing with value to monetize cutting-edge automation. Whether digesting and analyzing GPU resource consumption or queries produced, Orb offers niche metrics to track consumption within this budding and blossoming industry
SaaS and API - Orb’s SaaS and API pricing model are hybrid and exciting…combining both seat-based pricing with usage factors (API call volume, MAU connections, etc.), Orb can do it all
As mentioned yesterday, Orb recently announced their $14m Series A round which was led by Menlo Ventures and included participation from Greylock, South Part Commons, and various other investors. What started as the realization of a problem quickly became a passionate endeavor for Alvaro Morales and Kshitij Grover. Today, they’re still hoping to provide every business with the infrastructure to unlock their revenue.
I’m personally excited about the journey ahead for this team and look forward to seeing what they do with all their new funding!
I hope you had a fantastic week learning a bit about usage-based pricing and two companies disrupting revenue models for good! I’ll see you on Monday!