Usage-Based Pricing

Noun · Startup & VC

Definitions

  1. A pricing model where charges scale with actual product consumption, such as API calls, compute time, transactions, or storage. Usage-based pricing aligns revenue with value in some products but can also create budgeting anxiety for buyers.

    In plain English: Charging customers based on how much they actually use the product.

    Example: "Usage-based pricing fit the API business better than seats because one team member could drive enormous consumption."

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