A pricing model that charges based on actual consumption or activity within a product — such as the number of scans run, emails sent, or API calls made — rather than a fixed fee per user or a flat subscription rate.
Why it matters
Usage-based pricing aligns cost directly with value received, which can lower the barrier to initial adoption (a customer only pays for what they actually use) but also makes revenue less predictable for the business, since it fluctuates with customer activity rather than being a stable recurring fee.
In a sentence
"We considered usage-based pricing tied to number of scans, but ultimately chose per-seat pricing because it gave customers more predictable, budgetable costs."
Related terms
- Antonyms: Per-seat pricing, flat-rate pricing.
- Often confused with: Per-seat pricing (see above).
- Synonyms: Consumption-based pricing, metered pricing.