Recognized as it’s consumed
For metered usage billed in arrears, Lago recognizes each day’s usage as that day’s revenue. Because the charge is earned but not yet invoiced, it sits in unbilled revenue until the invoice issues at the end of the period. A customer is on a $0.05-per-API-call plan, billed monthly in arrears. They make calls throughout January.Daily recognized revenue = calls that day × price per call.
There’s no deferred revenue here. You can’t defer what you haven’t billed, and you recognize as you deliver.
Usage billed in advance
Some usage charges are billed in advance at the moment they happen, like a one-shot transaction fee. Because the service is delivered immediately, Lago recognizes the revenue immediately. There’s nothing to spread and nothing to defer.Recurring usage, such as seats
When the charge is for something that persists across the period, like per-seat pricing, Lago treats it like a subscription: it spreads each seat’s fee daily across the days that seat is active. Add a seat mid-month and that seat gets its own daily schedule for the remaining days. A customer adds 1 seat at $30/month on January 16. January has 31 days, so the seat is active for 16 days (January 16 to January 31).What this means for your reports
- Usage revenue lands in the Recognized Revenue report on the days it’s consumed, not when invoiced.
- Until the invoice issues, in-arrears usage shows as unbilled revenue, not deferred revenue.
- Spikes in the daily recognized revenue line usually map to heavy usage days.
Usage recognition is only as precise as the usage data feeding it. For high-volume metering, treat the recognized figures as a close, continuously updated estimate that finalizes when the invoice is issued.