Usage Forecasting for Pricing
Forecast usage to set pricing that protects margin while enabling growth.
Quick checklist
- Forecast usage by cohort and segment.
- Build a base, upside, and downside scenario.
- Convert usage into cost and revenue ranges.
- Align included usage with activation goals.
- Update forecasts quarterly.
Step-by-step
- Pull historical usage distribution by segment.
- Define expected growth in usage per account.
- Translate usage into per-unit costs.
- Model pricing tiers with included usage.
- Validate margin with the usage calculator.
Forecasting signals
- Wide usage variance needs clearer tiering.
- Outliers should be managed with caps or enterprise plans.
- Under-forecasting leads to negative margins.
Common mistakes
- Using a single average for all segments.
- Ignoring seasonal usage spikes.
- Mixing trial usage with paid usage.
