Startup Amberflo.io Inc., which helps tech firms add usage-based pricing tiers to their products, today announced that it has raised $20 million in funding. 

Amberflo raised the bulk of the capital through a $15 million Series A investment led by Norwest Venture Partners. Previously, it closed a $5 million seed round led by Homebrew. 

Many tech firms tie the price of their products to customer usage. Cloud providers charge customers based on the amount of time they rent virtual machines and other infrastructure resources. A company with a managed database service, meanwhile, might tie pricing to the amount of data that users process per month. 

Santa Clara, California-based Amberflo provides a platform that makes it easier to implement usage-based pricing tiers. The startup also promises to ease certain related tasks, such as estimating the business impact of changes to a product’s pricing structure. 

Before a company can charge customers based on their product usage, it has to measure that usage. Performing the task efficiently has required companies to build custom software tools. According to Amberflo, its platform provides the necessary tools in a pre-packaged form to save time and effort for tech firms. 

Using the platform, a company can collect data about customers’ product usage and visualize it in charts. A cloud provider, for example, could measure the type and number of virtual machines that a customer rents. The platform can also track other product usage metrics, such as the number of users who log into a service during a given month.

Amberflo offers its data collection features alongside a billing system. According to the startup, the system enables finance teams to roll out new product pricing plans without writing code. Users can also customize a new pricing plan by adding features such as prepaid credits and discounts.

To help companies optimize their go-to-market operations, the platform provides built-in analytics tools. They can be used to estimate how a pricing change would impact revenue and other business metrics. A company could, for example, use the tools to estimate whether it should switch a subscription product to usage-based pricing. 

According to Amberflo, its platform can be 10 to 100 times more cost-efficient for tech firms than building a custom billing system. The startup also promises to save time for developers in the process. The company says its platform avoids the maintenance tasks associated with operating internally developed billing and usage tracking software. 

“It’s abundantly clear that businesses are beginning to demand more fair and transparent pricing that reflects actual usage of products,” said founder and Chief Executive Officer Puneet Gupta. “Amberflo is leading this transition to a usage-based future with our cloud-native metering platform and billing application, which provide our customers with scale, flexibility, cost effectiveness, and greater customer satisfaction.”

The company says its platform has been adopted by more than a dozen tech firms. Its customers include well-funded developer tooling provider Coherent Capital Advisors Ltd. and Snowflake Inc. rival Firebolt Analytics Inc., which received a $1.4 billion valuation last year. 

Amberflow will use the proceeds from its newly announced funding round to hire more workers. The company reportedly plans to grow its 12-person team to about 48 employees by year’s end. 

Image: Amberflo