By ET Bureau - April 27, 2023 6 Mins Read
m3ter, the pricing operations platform, today raised $14 million in Series A funding to further its mission to help software companies successfully operationalise modern usage-based pricing strategies to realise their full potential. The investment will support m3ter as it launches new analytics features and expands its U.S. presence, building on impressive traction since the company launched from stealth in 2022. The round was led by Notion Capital, with participation from existing investors Insight Partners, Union Square Ventures, and Kindred Capital.
m3ter was founded to support software companies moving beyond simple recurring subscription models to implement hybrid and usage-based pricing (UBP). These models have grown in popularity thanks to the widespread adoption of Product Led Growth (PLG), as well as the rise of APIs and automation. The ability to improve margin control, boost customer satisfaction and retention, and expand revenue through costless upselling has also made this emerging pricing strategy an invaluable lever for growth for modern software businesses. According to the latest data from OpenView, usage-based businesses continue to outperform the market, with annual revenue growth 31% greater than that of their peers while net dollar retention is 9 percentage points higher. Today, 61% of SaaS companies have some form of UBP in place, up from just 27% in 2018.
Despite their advantages, usage-based pricing models are challenging to deploy and manage because existing pricing and billing tools are not well adapted to them. This leaves companies ill-equipped to handle pricing and billing with any complexity or scale, which negatively impacts revenue, time to market, and customer experience.
Since its emergence from stealth, m3ter has experienced strong demand, growing its customer base by 375% as businesses of all stages look for a way to support hybrid and consumption-based pricing without having to change their existing systems. Customers include cloud infrastructure, payments, fraud detection, and ID verification businesses like ClickHouse, Sift and Onfido – all operating in sectors where a usage-based pricing model is a natural fit, but is difficult to implement and manage without the technology to support it.
m3ter’s platform is designed to support software companies of all stages and variations of pricing complexity, so they can scale with confidence. It plugs directly into existing systems to capture granular usage, pricing, and account data at scale, and then apply complex pricing configurations to calculate error-free bill items in near real-time. This data feeds systems throughout the stack, including the billing and finance system (to automate billing operations), the SaaS product itself (to deliver billing dashboards to end customers), and Sales CRM and Customer Success platforms (to allow tailored sales deals as well as smart, well-informed, and timely conversations with existing customers). Pricing changes are easy to coordinate across teams, while pricing strategy is guided by concrete data, removing much of the guesswork to identify untapped opportunities and deliver substantial bottom-line benefits.
In the last year, m3ter’s technology has helped database technology company ClickHouse add usage-based pricing to its new cloud offering, ClickHouse Cloud, within just two months. By working with m3ter, ClickHouse was able to design, iterate and deploy the ideal pricing model for ClickHouse Cloud three times faster than would otherwise have been possible. Clickhouse now has the flexibility to experiment with and adjust pricing in the future, and ClickHouse Cloud customers have full access to their usage and spend data, enabling them to accurately predict costs and adjust consumption as needed.
m3ter has also partnered with leading subscription management platform, Chargebee, to deliver advanced event metering, usage-based pricing, and billing capabilities to businesses around the world. Together, m3ter and Chargebee are helping companies simplify their journey from simple subscriptions to more sophisticated pricing strategies with highly-configurable models.
Today’s funding will allow m3ter to deliver on its ambition to build an advanced analytics offering to complement its sophisticated reporting capabilities, starting with a new Cost Allocator it is co-creating with a cohort of current customers. The platform will apply data science techniques to identify gross margin performance on a per-customer basis, allowing businesses to take action on low-margin clients via pricing adjustments or cost optimisations. Also under development are Pricing Experimenter and Usage Forecaster products. Pricing Experimenter allows customers to explore different pricing models in real-time with historic or simulated usage data to understand their impact on revenue before implementing them. The Usage Forecaster provides accurate usage and revenue forecasts over multiple horizons. Customers can identify operational issues in real-time, identify end-customers who may churn or could be upgraded to a better pricing plan in the near term, and make financial plans over the longer term. Taken together, these three features lay the foundation for fully automated pricing decisioning.
m3ter will also use the funding to support its ongoing expansion in the U.S., building on recent strategic hires in the market including the appointment of Craig Irons as VP Sales, North America. Craig joined m3ter from AWS where he led worldwide GameTech business development, strategy, GTM, and operations. Before that, he was the first salesperson at Mirantis, leading the cloud computing company’s sales team until it had annual recurring revenue (ARR) of over $50m. Craig’s team will also be bolstered with key customer-facing hires to support m3ter’s growing customer base in the region.
Griffin Parry, CEO and co-founder of m3ter, said: “In a more challenging software market, SaaS businesses are balancing growth with profitability, making pricing an ever-more valuable lever. Hybrid and usage-based pricing are now firmly in the spotlight because of their ability to deliver better customer experiences while reducing churn and increasing revenue, and as their popularity continues to grow, the opportunity for m3ter is obvious. Today’s funding enables us to take our ambitions to the next level, making new pricing models accessible for every software business that needs them.”
Jos White, who led the investment from Notion Capital, said: “I’m excited to announce our investment in m3ter. As pricing becomes a strategic priority for more software businesses, the one-size-fits-all approach looks increasingly obsolete. m3ter’s technology will power this transition towards more usage-based and intelligent pricing. Already, the company’s co-founders have laid solid foundations with an exceptional team and product, as well as deep engagement and alignment with their early customers and partners. We look forward to the bright future ahead.”
Tanya Bragin, VP Product at ClickHouse said: “Working with m3ter has enabled us to deliver granular usage statements and bills that our customers can rely on. As we evolve our offering, we can adjust, experiment, and iterate on the pricing model on top of the m3ter platform without distracting our engineers. m3ter takes the headache out of this process, so we can focus on building the best database for real-time analytics and offering it as a hosted service.”
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