What is Pay on Use?
Pay on use or pay-per-usage is a pricing model where customers pay only for the services they use. It is an alternative to traditional pricing plans, where customers pay a set fee regardless of how much they use the service. With pay per usage, customers are only charged for their services, which builds customer’s trust.
Significance of Pay on Use in E-commerce and Logistics
As the name suggests, pay-per-use models allow businesses to pay only for the services they need, eliminating unnecessary costs. Here are the other benefits of opting for this method.
- Increased market share: Companies establishing pay-on-use models lower the entry bar for customers as they use services/products only when required. It convinces customers to start using products whenever they like.
- Product evolution: Companies can track product/service usage and understand how customers use their services. Depending on the results, they can improvise and create personalized options for them.
- Improved customer loyalty: With a pay-on-use model, companies become more service-focused. This makes customers less likely to switch to competitors, increasing their loyalty. In addition, the product value increases with add-on benefits like maintenance and support.
Prerequisites of Pay on use and How it Works
Pay on use is a flexible model that works in the following ways –
- The model considers factors such as distance, volume, weight, and type of cargo to calculate the service’s cost accurately.
- The customer pays a predetermined fee at the time of booking, and the actual cost is calculated after the service is completed.
- Customers pay only for their used services, thus eliminating overspending and unnecessary costs.
- As customers know their costs and can make more informed decisions, scheduling logistics operations becomes easier.
Use Cases of Pay on Use
Some courier companies offer pay-per-usage pricing plans where customers pay only for the services they use. This pricing model benefits customers who don’t need regular shipments, as they can pay only for the services when they need them.
