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Pay-Per-Use Pricing and Collaborating With Your Finance Team

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Meme of business man laughing into cell phone, captioned ha ha, business! In a past life I worked as a budget analyst, meaning my job was to 1) understand the variances between what was actually spent compared to what was expected and 2) project business units’ future expenses. My position was housed within the finance department, and I could typically use the finance and accounting systems to put together a rough sketch of what happened in a given period. However, it required collaboration with the business units that owned the budget to answer questions about why things happened and what we thought would happen in the future.

Starting my career in the finance department definitely helped shape my worldview. Sometimes it feels like this worldwide has little overlap with the constituency that RedMonk is most focused on: the developer. Sometimes as I get excited about emerging trends as an industry analyst, my past-self shows up with a “but how do you want me to budget that?”

I think my past-self’s primary concern is worry over losing the what. Am I, your finance counterpart, still able to understand the cost drivers that are impacting the budget? Can I still explain what’s happening and make reasonable assumptions about what is going to happen next? Probably not on my own.

As we move further into the world of variable cost pay-per-use pricing, the further abstracted your finance team will be from the underlying cost drivers.

As cost drivers become operationally-driven rather than contractually fixed, your partnership with finance may need to increase or improve. Business processes are well-adapted for things like amortizing a contract, but things like pricing per API call or http request are probably less familiar and visible to your finance and accounting counterparts.

The pay-per-use pricing model offers companies significant cost savings, but it’s worth recognizing that this can come with added complexity for your business partners. As complexity increases, they may rely more on your expertise to build out their financial models. A closer, more collaborative relationship with your finance and accounting departments will be crucial to making the transition to pay-per-use pricing successful.

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