What is usage-based pricing?
Usage-based pricing charges customers according to how much they consume — per API call, per gigabyte, per seat, or any unit you track — rather than a flat subscription fee. Costs scale with usage, so customers pay for what they actually use and spend grows with the value they get.
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Usage-based pricing (sometimes called consumption-based pricing) ties what a customer pays to what they use. It is common in infrastructure, API, and AI products, where costs are driven by volume and a flat fee would either overcharge small customers or undercharge large ones.
There are several common models. Pure usage charges a rate per unit consumed. Tiered and volume pricing change the per-unit rate as usage crosses thresholds. Hybrid pricing combines a fixed base fee with metered usage on top — for example a monthly platform fee plus a per-API-call charge. Choosing between them is a pricing-strategy decision; supporting them is a billing-system requirement.
To bill on usage you need to capture billable events accurately in real time, aggregate them by billing period, and turn them into clear invoices that show exactly what was consumed. That metering and aggregation is the core of metered billing.
Billing for the rest of us.
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