Usage-Based Pricing: 9 Subscription Models for Any Industry

John Warrillow started and exited four companies, wrote the bestselling Built to Sell, and discovered that the most important lever for usage-based pricing is one most founders underestimate: recurring revenue structure. In The Automatic Customer, he identifies nine subscription models that apply far beyond software. John breaks down each SaaS monetization model with real case studies - from Dollar Shave Club's consumables play to Salesforce's front-of-the-line support tiers to Zipcar's network effect strategy. You will learn the 3:1 LTV to CAC ratio investors demand and why usage-based pricing through subscriptions makes your company more valuable. Warrillow has built and sold four companies and says he wishes he had written The Automatic Customer before Built to Sell - because building recurring revenue through the right subscription models should come before thinking about exits. 🔑 Key Lessons 💰 Usage-based pricing requires at least 3:1 LTV to CAC: John Warrillow says professional investors won't touch a subscription business unless lifetime value is at least three times the customer acquisition cost. This ratio determines whether recurring revenue is truly sustainable. 🎯 Front-of-the-line pricing creates premium usage-based pricing tiers: Salesforce and Adobe charge subscribers for expedited support response times. Offering 1-hour critical support versus 2-day standard tickets lets you capture willingness to pay from enterprise customers. 🔄 Network effects drive SaaS monetization through density not breadth: Zipcar nearly failed trying to cover all of Boston. They survived by breaking the city into 16 micro-precincts and achieving subscriber density in each one before expanding to the next. 🛠️ Brand beats Amazon for consumables subscription models: Dollar Shave Club competed with Amazon by injecting entertainment and personality into a boring commodity. When your product is undifferentiated, brand and community become the subscription differentiator. Chapters Introduction Meet John Warrillow - author, founder, 4x exiter John's personal life - dad, cyclist, Ironman Success quote - Roosevelt's "In the Arena" How Built to Sell changed the way Omer thinks about business The premise of The Automatic Customer Subscription models aren't just for software companies Why John wrote this book after Built to Sell How John researched the nine subscription models The LTV to CAC ratio investors demand for usage-based pricing Model 1 - Membership website Model 2 - All-you-can-eat library (Netflix, Spotify) Model 3 - Private club model Model 4 - Front of the line (Salesforce, Adobe) Model 5 - Consumables (Dollar Shave Club) Model 6 - Surprise box (Barkbox, Birchbox) Model 7 - Simplifier model Model 8 - Network model (Zipcar) Model 9 - Peace of mind model with usage-based pricing Lightning round Best advice - Focus and don't get too high or low Book recommendation - The E-Myth What makes a successful entrepreneur - stick-to-itiveness Productivity tool - Evernote Fun fact - Feel-good movie junkie Passion - Cycling Resources Full show notes: https://saasclub.io/71 Join 5,000+ SaaS founders: https://saasclub.io/email