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Pricing models

Usage-based pricing

Charging by what the customer consumes rather than by a fixed subscription fee. Also called consumption or metered pricing.

Usage-based pricing charges for consumption: API calls, tokens, messages, gigabytes, transactions processed.

It aligns price with value and lowers the barrier to starting, which is why it dominates infrastructure and AI products. It also makes revenue harder to forecast, harder to recognise, and much harder to bill correctly, because now every invoice depends on an event pipeline being complete and correct at the moment the cycle closes.

Pure usage pricing is rarer than it looks. Most businesses run a hybrid: a platform fee plus usage, or a committed amount drawn down against actual consumption. See prepaid credits and overage.

Related terms

  • Metered billing Collecting usage events during a period and rating them into invoice lines when the period closes.
  • Tiered pricing Unit prices that change as volume crosses thresholds, with each tier applying only to the units inside it.
  • Prepaid credits A balance a customer buys up front and draws down as they consume, sometimes at a discount to pay-as-you-go.
  • Overage Usage beyond an included allowance or commitment, charged at a separate rate.