FinOps & process
Percentage-of-savings pricing
A cost-tool pricing model that charges a cut of the spend it manages or the savings it identifies, rather than a flat fee.
Last updated
Definition
Under percentage-of-savings (or percentage-of-managed-spend) pricing, a vendor's revenue rises directly with your cloud bill or with the savings it can claim credit for finding. That means the vendor's incentive is not quite the same as yours: a tool priced this way benefits from your spend staying high or from claiming ever-larger savings, not from making itself unnecessary by helping you spend less.
Flat, plan-based pricing removes that misalignment: the fee stays constant regardless of spend or savings, so the vendor's only real incentive is for the product to stay useful enough that you keep paying for it, the same incentive any other software runs on.
Where it shows up
Percentage-of-savings or percentage-of-managed-spend pricing shows up directly in a vendor's own pricing page or contract terms, stated as a cut of managed spend or of savings the vendor claims credit for finding, rather than as a flat, fixed monthly fee unrelated to the size of the bill.
What makes it expensive
A common expensive habit is signing a percentage-based contract while spend is small, then finding the fee scales up automatically as the company and its cloud bill grow. The rate never changes, so the contract never looks like it got worse. Only the invoice does, every year, in step with the growth you were hoping for.
Related
The invoice is a lagging signal.
A monthly invoice tells you what already happened. CostMon builds a daily baseline, so a spike stands out while you can still act on it.