From Insurance to Marketing – How Are Usage-Based Pricing Models Being Used?

In the world of business management, the pricing model you use will determine whether you experience standout success or slow into stagnation. As such, many company owners are doing what they can to provide the best possible experience for their customers through flexible pricing.

The idea is to give customers products based on their preferences and behavior, which is challenging when you consider specific industries such as insurance. Recently, usage-based pricing has made it much easier for companies to flourish in a competitive landscape. Here are a few examples of usage-based pricing models that work particularly well.

1). Success in the insurance sector

Insurance isn't everyone's favorite topic, which is why many insurance companies have a challenging time convincing their target demographic to try their policies, until the introduction of usage-based insurance through telematics. Telematics is the mix of telecommunications and informatics, and UBI telematics uses a tracker to help gauge a driver’s behavior and produce reasonable prices based on the metrics.

A company owner can manage their fleet vehicles with the help of UBI and save not only on fuel costs but also insurance costs as they work to improve driver behavior. After all, UBI rewards best-practice methods when driving with lower prices overall. It gives more control to the client, which is why telematics is one of the most successful ways of managing insurance for fleet vehicles. As a result, the insurance sector is more popular than ever, thanks to the usage-based pricing model.

2). Success through marketing

One of the primary advantages of the usage-based pricing model is how easy it can be to market. In fact, most people have come to expect companies that cater to their preferences, offering flexible pricing based on the situation. It’s much easier to market the usage-based model compared to everything else, as your customers won’t feel like they’re getting their money’s worth.

Flexible pricing is also much more relatable compared to other business models, allowing you to market your company in various social media channels without issues. You can even utilize TikTok to your advantage by focusing on shorter videos to sell your products. With the usage-based pricing model, you're marketing something that the people already want, which means you don't have to worry much about convincing potential customers.

3). Success through subscriptions and free trials

For those in the insurance industry, the usage-based pricing model is a relatively new tool for success. However, the business model has been experiencing success for a long time. All you have to do is look into the history of the MMORPG and the rise of software companies such as Blizzard with games like World of Warcraft. They were able to prove the superiority of the usage-based pricing model compared to everything else, as it even helps with software licensing.

At the end of the day, it's vital that you give your business every opportunity to succeed in a competitive industry landscape. Therefore, a usage-based pricing model is practically mandatory, as it empowers the end user and gives you a chance to focus on other aspects of your business without risk.

Finance