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Lago calculates subscription and usage charges, generates invoices, and connects billing to payment providers and finance tools. Lago Cloud is the hosted option: Lago runs and updates the billing service while your team configures its pricing and connects customer and usage data. You can also self-host Lago when your team needs to operate the deployment.

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Five-step billing workflow

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1. Usage ingestion

Events provide information about your customers’ consumption, with the highest level of granularity. Any product feature for which you want to charge your customers should correspond to a specific event. An event can be triggered by an action or can be sent periodically. Lago ingests events at scale while preventing duplicates.

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2. Metrics aggregation

The aggregation process consists of converting events into billable metrics. There are 6 aggregation types:

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3. Pricing and packaging

Plans define how much your customers pay for using your product. Combine plans and billable metrics to implement any billing model: subscription-based, usage-based, or hybrid. Billable metrics may be priced differently depending on the associated plan.

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4. Invoicing

Lago automatically generates invoices for each customer according to the plan model: the subscription fee can be billed at the beginning or at the end of the billing period, and each usage-based charge is billed in advance or in arrears depending on how you configure it. Invoices include fees, taxes and customer information.

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5. Payments

When an invoice is emitted and finalized, it’s ready for payment collection. Connect payment providers through native integrations or trigger payments on any PSP using the invoice payload created by Lago.