Stair-step pricing is a variant of the usage-based model, where the price increments at specific usage levels instead of gradually. Based on the usage of a metric, a customer will be placed into a different pricing tier on a separate flat monthly fee.
Because the price of the product doesn't change immediately with additional usage, a company will be much more likely to adopt within the bounds of the tier they select, and more adoption means less churn.
A very common strategy with stair-step pricing is to say "First 10 Users Free" or some other value metric. This gives customers a way to "test the waters" before they pull the trigger on a widespread adoption.
Because price jumps are going to be sudden and perhaps unexpected if no warning is given, customers can get very upset if their expenses suddenly increase, leading to a loss of trust and potential churn.
If a customer is aware of how much they are using, they may feel that they cannot further adopt a product due to a cost increase, where as with a traditional usage-based model the price increases are incremental and not as painful.
Stair-step works best when a company meets the following criteria:
Stair-step's primary purpose is to alleviate customers.
Stripe has a volume-based pricing plan where different tiers can be defined based on quantity and flat fees.
Stripe has a volume-based pricing plan where different tiers can be defined based on quantity and flat fees.