Usage-based pricing
Charging customers based on how much of a product they actually consume, rather than a flat recurring fee.
Usage-based pricing charges customers for what they actually consume — API calls, compute time, tokens, seats used — instead of a flat fee that's the same whether a customer barely touches the product or runs it hard all month. It's the default pricing model for infrastructure, API and increasingly AI products, because it ties what a customer pays directly to the value they're getting.
It's rarely pure usage in practice. Most companies run a hybrid: a base subscription that includes an allowance, with usage beyond that allowance billed as overage, or a subscription that bundles in a set number of prepaid credits. The pricing model and the billing infrastructure underneath it are two different problems — deciding to charge by usage is a business decision; actually metering that usage accurately, in real time, at scale, is the engineering problem it creates.
That's the split worth understanding: pricing is the decision (what to charge for, and how), billing is the system that makes the decision real (measuring usage, applying the rate, producing an accurate invoice). Getting the pricing model right doesn't help if the metering and billing underneath it can't be trusted.