SMBs work that way, but it's an interesting way into the enterprise through "dark procurement" (essentially teams going rogue, buying a service without IT's knowledge, IT finds out, a business case is made... and boom... 2000 paying users instead of 1, having managed to subvert the usual pitching processes).

I agree, it's not right for a lot of products (some of which are better charged at a flat fee, or a per "thing" basis), but it's not a stupid decision for a lot of businesses.