Introduction

Per-active user is a variant of the classic per-user pricing model, the only difference is you bill users based on the number of active users. Usually, this means only charging for users who've logged in over the last 30 days instead of all seats.

Overview

PROS
  • Customers only pay for the users who use the product
  • More likely to see widespread adoption compared to traditional user-based billing
CONS
  • More complicated than traditional user-based billing
  • Does not work well with annual plans

Breakdown of the Pros

Customers only pay for the users who use the product

A customer may prefer per-active user over traditional per-user because they may onboard 100% of their company, but only 60% of employees would be using the product, meaning they pay 40% less then with per-user.

More likely to see widespread adoption compared to traditional user-based billing

As a customer can onboard 100% of their company and only pay for who uses the product, they can feel comfortable doing a full rollout. A massive implementation will reduce churn because it's harder to stop using a product when a lot of people use it.


Breakdown of the Cons

More complicated than traditional user-based billing

Understanding per-active user pricing will take a bit more brainpower than the dead-simple user-based pricing. It also doesn't help that different business define active users differently, the metric (logging in or sending a message?), and the duration (30 days or 90 days since last activity?).

Customers aren't too thrilled with annual plans

Annual plans suffer from the same problems that tradition per-user pricing faces, you pay per active user for a year, essentially locking you into spending even if someone only logs into the product once. To combat this often companies offer much steeper discounts for their annual plans than traditionally done (the standard is two months free).


WHO SHOULD USE IT

If you are a company that is struggling to find customer adoption with your current per-user pricing strategy, moving to a per-active user strategy could help. By only charging customers on what they use, they are a lot less scared to onboard larger numbers of people.

Implementation

Implementing in Stripe is identical to traditional user-based billing; the only different thing will be the need to update quantity based on "active users" instead of all seats.

The User Interface

Implementing in Stripe is identical to traditional user-based billing; the only different thing will be the need to update quantity based on "active users" instead of all seats.

SUBSCRIPTION MANAGEMENT
See Live Example

Examples

Own a Subscription SaaS Product?
Use the UI/UX Toolkit for Stripe Billing