Usage-based pricing
Also called Consumption pricing, Pay as you go
Usage-based pricing charges for what you consume, such as API calls, storage or compute hours, so the bill moves with usage.
Why it matters to a budget owner
Cloud infrastructure and many developer tools bill by usage. You cannot forecast the cost from the contract alone; you need a usage estimate.
Keep usage-priced contracts apart from fixed fees in any spend total, so variable cost never hides inside a figure that looks fixed.
What to record
- The unit and its price
- Any committed minimum
- Recent monthly usage
Frequently asked questions
How do I budget for usage-based pricing?
Start from recent usage, add the growth you expect, and keep it as a separate variable line rather than a fixed figure.
General working knowledge about commercial contracts, not legal advice. Your own agreement governs.
Glossary
Look up related terms
- Per-seat pricingPer-seat pricing charges a fixed fee for each user or licence, so the bill grows with headcount.
- Minimum commitmentA minimum commitment is the least you agree to pay or use over a period, whatever your actual usage turns out to be.