In partnership with
Was this email forwarded to you? Sign up here
Consumption revenue is trending. It’s going to become more and more prevalent.
I was reading an excellent breakdown of $SNOW ( ▼ 1.15% ) and how they forecast consumption-based revenue. Given I spend a ton of time thinking about consumption-based revenue, especially for the data & information services world, I thought it would be worth sharing.
CJ Gustafson does a good job of breaking out how they forecast, but then other problems that arise, like how to compensate salespeople.
“Snowflake adopted a similar approach but wrapped it in a system of credits, which now function as tokens. One credit typically equals an hour of compute time on a baseline warehouse.”
I like the credit or token system, I think it’s a good way to guarantee a minimum amount of revenue, and then on the backend start eating away at those tokens as they consume.
“You have to change the culture around paying people in a consumption model. It’s harder to overachieve because the finance org is so good at forecasting users based on historical data. To be a million-dollar rep you can’t just do 110% of your number.”
The salespeople have to be compensated correctly, but also, they aren’t just handing accounts off to customer success or an account manager. Getting the account to consume and grow is where the real opportunity is.
I think or predict that 2026 will see more consumption-based pricing. It’s inevitable in a world of AI. We want more data, we want to consume more, and everyone should ultimately pay more. I think the first movers should see a lot of benefit, though it is tricky to get it right.
Get the investor view on AI in customer experience
Customer experience is undergoing a seismic shift, and Gladly is leading the charge with The Gladly Brief.
It’s a monthly breakdown of market insights, brand data, and investor-level analysis on how AI and CX are converging.
Learn why short-term cost plays are eroding lifetime value, and how Gladly’s approach is creating compounding returns for brands and investors alike.
Join the readership of founders, analysts, and operators tracking the next phase of CX innovation.