Lago, best Stripe Billing alternative for usage-based Billing

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What is Stripe Billing?

Stripe Billing is one of Stripe’s 21 products (more on that here). It is a “recurring billing and subscription management software,” as defined on Stripe's website. It also offers limited usage-based capabilities, such as tiered or package pricing. “Stripe Billing” is directly connected to “Stripe Payments” to process payments for created invoices.

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What is Lago?

Lago is an open-source metering and usage-based billing solution. It offers a self-hosted and cloud-based, scalable, and modular architecture to manage subscriptions, usage based billing and all the nuances in between. It's the go-to choice for companies that require a powerful tool to handle complex billing logics, allowing you to build a comprehensive billing system from scratch with ease.

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How is Lago different from Stripe Billing?

Let’s go through the main differences between Lago and Stripe Billing.

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1. Lago won’t lock you in with Stripe Payments

First of all, choosing to use Stripe Billing means you are exclusively tied to a single payment processor… called “Stripe Payments”. You won’t be able to use other payment processors than Stripe to collect payments for the invoices your companies will issue. This can quickly become an issue: in some geographies, you might want to offer to collect payments through local payment methods that Stripe doesn’t offer, or to negotiate Stripe’s fees down you might need to have a payment processor alternative at hand.

Lago is agnostic, so you connect it to any payment processors. With either native or custom integrations, you’ll be able to switch payment processors or use several ones as you see fit. This eliminates the risk of vendor lock-in.

Lago can be used with any payment platform, including Stripe, PayPal, Mollie, Adyen, etc. This gives you autonomy, freedom, and flexibility to design your stack and make it evolve as your company grows.

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2. Lago was designed for usage-based and complex billing. Stripe Billing was designed for the “subscription economy”.

Example #1: Stripe is not designed for usage-based or complex billing. Lago is.

Although Stripe Billing has been adding “usage-based billing capabilities” recently, their product wasn’t initially built for this. And it shows.

Stripe Billing is not event-based, so they require you to do a lot of preparatory work to fit into Stripe Billing’s architecture: you need to pre-aggregate usage-based events into proper units before sending them to Stripe Billing.

We’re run a simple experiment: we tried to reproduce Stripe’s pricing ($0.30+2.9%) by using Stripe Billing, and we were unable to automatically calculate complex metering and aggregation related to usage-based billing. (Read about the full experiment here and Hacker News’ comments here)

Last but not least, Stripe's rate limit for usage ingestion is 100 requests per second, which can be a hard limitation for Cloud, API, Fintech, or AI companies (and lots of other verticals) that are recording heavy usage.

With Lago, you can fully customize your usage-based billing engine. The event-based architecture makes it easy to send events on-the-go that are automatically interpreted by Lago into a proper unit to be charged. No need to run pre-aggregation on top of your billing engine, Lago does it all!

Example #2: Stripe has restrictive billing boundaries, while Lago has flexible ones.

Stripe Billing was made for basic subscription billing systems, with simple boundaries, price plans, and calculations. However, many businesses require a more complex setup. For instance, it's impossible to set up a yearly plan with monthly overages in Stripe.

Lago is much more flexible. You can define specific boundaries for a plan, but still collect usage-based items on a monthly basis. You can also overwrite specific values for a dedicated customer.

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Table of comparison between Stripe Billing and Lago

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Is Lago cheaper than Stripe Billing ?

We're not fans of Stripe Billing's "rent-seeker" pricing approach. This never scales with your business. Stripe Billing will cost you 0.5% (and up to 0.8%) of your transaction volume, on top of Stripe Payments (starts at 2.9% + $0.30 per successful card charge). With the full vendor lock-in of Stripe, you might stack dozens of fees that are directly impacting your own revenue. Once again, Stripe has 21 products and each of them has their own pricing.

Lago is an open-source project. This means you can have a billing engine for free! In addition to this, Lago offers a cloud solution. We prefer to charge a fixed platform fee and a volume-based fee for the usage-based events ingested for the fully managed application.

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Is Lago an open-source alternative to Stripe Billing?

Yes, Lago is an open-source and open-core Stripe Billing alternative. Our GitHub repository is open to everyone, running under an AGPL v3 license.

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Is Lago processing payments like Stripe?

Lago is focusing all its energy on billing. We aim to integrate well with adjacent tooling (payments, ERP, Quoting, etc.), but we strongly believe that billing deserves its own dedicated platform. We are directly connected to external payment processors, including Stripe Payments.

Stripe is a payment processing service at its core. As it grew, they developed many ancillary products, such as tax, treasury, and billing.

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Does Lago provide a Stripe Billing-like user interface?

Yes! We’re API-first, but also offer a slick and user-friendly interface that can be used by non-technical people.