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Billing mechanics

Overage

Usage beyond an included allowance or commitment, charged at a separate rate.

Overage is what a customer is charged for consumption past what their plan includes.

The policy decision is what happens at the boundary. You can charge overage, block further usage, throttle it, or notify and continue. Each is a legitimate entitlement enforcement mode, and the right one depends on whether an interruption harms the customer more than an unexpected invoice does.

Whatever the choice, overage should never be a surprise. Notification at 80% and 100% of an allowance costs nothing and prevents most of the disputes that overage otherwise generates.

Related terms

  • Commitment A contracted minimum spend over a term, usually in exchange for a lower rate.
  • Prepaid credits A balance a customer buys up front and draws down as they consume, sometimes at a discount to pay-as-you-go.
  • Entitlement What a customer is allowed to use because of the plan they are on: which features, and up to what limits.
  • Usage-based pricing Charging by what the customer consumes rather than by a fixed subscription fee. Also called consumption or metered pricing.