The "Use It or Lose It" Data Pricing Model for Web3 Is Great—Just Not for the Client

When it comes to our utilities, our infrastructure, and our service subscriptions, the types of payment plans are just about infinite. There are entire economics courses that focus on what should be offered depending on the service, customer, and competition. But there is one model that stands out beyond the rest. The "Use It or Lose It" (UIoLI) model is a special type of agreement. The business offers the customer a certain amount of product or service each month, and the customer is welcome to use as much or as little as they like, as long as it is under the limit. There is freedom for the customer because they don't have to keep track of usage and pricing; they always pay the same, and as long as they choose a limit well above what they might use, they don't have to worry about going over it. This style of service is about peace of mind, and it is generally regarded as the best model there is.

Oh, but there's only one issue here. That "best" model might really be ideal, but all of this is from the perspective of the business, NOT the customer.

For the customer, there are few, if any, models that are more predatory. This model, by default, ensures that the customer is paying for something every single month that they will never get back. Think of it as a tax, a penalty, or even just theft. The key in the UIoLI model is psychological, as it's made to help the customer focus on avoiding an issue and less on the issue it creates. You see, if I have this type of subscription, I am incentivized to pick a plan that is higher than my largest usage. The reason for this is that if I go over, the next level is either more expensive, there is a penalty, or the service is simply shut off. All of these cost more and create unpredictability in the system. In other words, it destroys my peace of mind. Because of this, I want to always stay under the limit and avoid these problems. What I don't focus on is the extra I will always pay for but never use, and that is free revenue for the provider, as we said: great for the business, terrible for the customer.

Unfortunately, this type of behavior is making its way into Web3, which was supposed to champion itself against big businesses taking advantage of computers. The practice is especially prevalent in Web3 infrastructure, which ensures that every member of the system will help to bear the burden of artificially inflated rates. Let's dive in to see what can be done about this.

Use It or Lose It Is Dead

A key element of the UIoLI business model is a service that has a large penalty for the service going down. Few places are more susceptible to this than RPC services, as they are the backbone of an interconnected Web3 ecosystem. RPC providers know this and use the UIoLI system heavily in order to maximize revenue. It is played off as a way for businesses to have a predictable subscription fee, but you could make your electric bill more predictable by just paying twice your average usage each month. Predictable? Yes. Helpful? No.

Thankfully, there are some providers that are taking notice of this and using the more efficient, more fair pricing mechanism that would be approved by economic purists: Pay as You Go (PAYG). It's not a new concept, but it's also the only business model that should be operating within Web3, focusing on the fair treatment of all parties. dRPC seems to be one of the pioneers for this, and it's taken a bold move to go against the marketing of "predictability" and show how the model is better all around. One advantage for the company is that they have gained a massive following in short order, not just because they offer a better pricing structure but because they can put quality behind it. The platform has a large number of networks they service, and they are one of the biggest RPC providers that are fully decentralized. This has become a larger and larger sticking point as people are identifying centralization weaknesses in what should be a free and decentralized system. To help people understand this key point, the team at dRPC even created a short film to screen at ETHDenver. Called Alice in Nodeland, it uses the classic fairy tale to call out the major issues of centralization in a very entertaining way.

Where to Go from Here

It's clear that the PAYG method for using Software as a Service (SaaS) is better for the customer in every respect. Although the business might not be able to extort extra revenue, they can still remain competitive by actually focusing on quality and providing their customers with things they are happy to pay for. We need to start examining our current Web3 infrastructure and demand that the Use It or Lose It model should go the way of centralization: an outdated, harmful relic of the system we are working to replace. It's time to find infrastructure providers that can provide fair services at fair prices, and we as the customers have the power to support those that do. The future of Web3 infrastructure should not be tied to practices that take advantage. They should hold true to those ideals of Web3 itself: everyone has a voice, and the community is what makes Web3 powerful.