Challenge

Hex has seen its user base grow at a rapid clip since launching in 2021. During that time, the San Francisco-based firm also observed an influx of users interested in applying rapidly advancing ML models to their products and business operations. These users had a common request: more compute options in Hex—including access to more CPUs, GPUs, and memory—that would better support advanced data science workflows such as model training.

As demand for Hex’s compute resources grew, the company recognized the need to charge some customers based on their actual usage. Hex began by experimenting with charging a fixed fee for a limited number of compute hours. However, the company found that customers’ growing appetites for compute resources would effectively require renegotiating contracts every time a customer hit their limit. Hex also encountered customers who were hesitant to sign up for an annual commitment when they were still experimenting with LLMs. These customers wanted a pricing model that would scale up or down with their needs over time.

It became clear to Hex that the answer was to offer usage-based pricing in addition to its core seat-based pricing, which would enable users to tap into the compute resources they needed when they needed them. Doing so would open up Hex’s product to more potential users, as well as generate additional revenue as users paid for the actual compute resources being consumed. However, Hex wanted to ensure that the transition to a usage-based model wouldn’t require considerable development time—and that it also wouldn’t create a disjointed billing experience for users.

“Usage-based pricing was a no-brainer for us to add,” said Barry McCardel, cofounder and CEO at Hex. “But the effort to build all of the billing infrastructure for it was actually going to be harder than the feature itself, so we pushed it off for a long time.”

Solution

Hex chose Stripe Billing for its seat-based subscriptions when it launched in 2019. In 2024, Hex was one of the first Stripe customers to use Billing’s new usage-based billing feature. Through the Meters API, users can natively meter usage events, analyze data, bill customers, and collect payments. That meant Hex didn’t need to build or maintain its own metering infrastructure—a potentially costly and time-intensive project that would require keeping track of tens of millions of usage events a month. Instead, customers’ usage data is sent directly through a no-code set up S3 connector, aggregated, and added to customers’ invoices.

With Stripe’s support, Hex rolled out its usage-based billing offering in stages. An initial group of reference customers tested the product to help Hex validate the offering. Those users provided valuable feedback on both the product and billing experience. That feedback helped Hex and Stripe refine the usage-based offering before making it available more broadly to subscribers with Hex’s Team and Enterprise plans.

Hex also added billing thresholds as a default option for those users taking advantage of usage-based billing. The billing thresholds—which are triggered when self-serve subscribers hit $100 in compute spend—helps give Hex more certainty that it will be paid for a user’s actual compute usage.

These thresholds also help users gain more visibility into their usage in real time: “This acts as a subtle ‘spend alert’ to help admins keep an eye on their compute spend, and helps prevent any unpleasant surprise spend come invoice time,” said Jo Engreitz, product lead at Hex.

Adding these usage-based options to the company’s existing Billing integration ensured that Hex customers had a consistent billing experience—regardless of whether they were offering seat-based subscriptions, usage-based billing, or a combination of the two.

Results

Protecting months of valuable engineering time

Working closely with Stripe engineers, it took Hex eight weeks to move from conceptualizing its approach to usage-based pricing and rolling it out to customers. That collaboration saved Hex several additional months of engineering hours that would have been spent not only on creating and implementing an in-house usage-based model, but also in ongoing maintenance and support.

A sizable portion of customers migrated to usage-based pricing in the first three months

In two months, Hex enabled usage-based pricing for advanced compute products as an add-on to existing subscriptions for Team and Enterprise users. Hex has already sent more than 500 million usage-based events to Stripe to incorporate into customers’ invoices, and are continuing to see a growing percentage of their customers opt into the new compute product.

An easy transition for existing users

McCardel said that Hex’s customers are enthusiastic about the addition of a usage-based option. And the rollout has been smooth. According to Engreitz: “There’s been near-zero support burden associated with the rollout. That absence of feedback is actually great feedback that it just works as expected.”