Subscription, marketplace or pay-per-use? Choosing a revenue model for your MVP
How you charge shapes what you build. A practical look at MRR, ARR, commissions and usage pricing for early-stage products.
Your revenue model is not a detail to decide after launch. It changes the features you need, the data you track and how investors value the business.
Subscription (MRR and ARR)
Customers pay monthly or yearly. Monthly Recurring Revenue (MRR) is the predictable income each month, and Annual Recurring Revenue (ARR) is MRR multiplied by 12. Subscriptions suit SaaS, memberships and services used regularly. You will need plans, trials, upgrades, failed-payment handling and churn tracking.
Marketplace commission
You take a percentage of each transaction between buyers and sellers. It suits booking platforms and niche marketplaces. You will need payouts, seller onboarding, reviews and dispute handling.
Pay-per-use
Customers pay for what they consume, such as credits, bookings or API calls. It lowers the barrier to start and grows with heavy users.
Freemium to paid
A free plan attracts users and paid plans unlock more. It works when the free product is useful on its own and upgrading is a natural next step.
How to choose
Look at how your ICP already pays for similar things, how often they need the product and how much value each use creates. Then build the simplest version of that model into your MVP and measure it from day one.
