Usage-based pricing

Usage-based pricing is a model where the amount a customer pays scales with how much of the product they consume, rather than with a fixed subscription fee or a seat count.

Also called consumption-based pricing, pay-as-you-go pricing.

It aligns cost with value delivered, which is why it became the default for infrastructure and AI products where the cost of serving a customer also scales with use.

It moves revenue from predictable to variable, which changes forecasting, sales compensation and the month-end close as much as it changes the price list. Teams usually underestimate how much of the work lands outside pricing.

Related terms