Usage-Based Pricing
A pricing model in which customers pay according to the volume of tokens consumed by model calls, computing resources used, or API requests made, rather than paying a fixed subscription fee. Revenue therefore grows naturally with the depth of customer usage.
Timeline (last 90 days)
For usage-based AI products, NRR is easily dragged down by customers' usage-optimization behavior, because customers learning to use the product in a more token-efficient way actually leads to revenue contraction.
For AI companies, there is debate over whether revenue generated by usage-based billing counts as ARR, because it fluctuates with usage and is less predictable than seat subscriptions.
In Agent scenarios, usage-based billing is more complex than traditional SaaS subscriptions: a single task may involve multiple model calls, tool calls, and retries, and cost varies non-linearly with task complexity.
Subscription and usage-based billing are two basic pricing structures for software products: subscriptions are more suitable for high-frequency long-term use, while usage-based billing is more suitable for scenarios with large fluctuations in usage frequency, but it brings the problem that users find it hard to estimate the total cost and experience billing anxiety.
All Facts (4)
For usage-based AI products, NRR is easily dragged down by customers' usage-optimization behavior, because customers learning to use the product in a more token-efficient way actually leads to revenue contraction.
50%UnverifiedFor AI companies, there is debate over whether revenue generated by usage-based billing counts as ARR, because it fluctuates with usage and is less predictable than seat subscriptions.
50%UnverifiedIn Agent scenarios, usage-based billing is more complex than traditional SaaS subscriptions: a single task may involve multiple model calls, tool calls, and retries, and cost varies non-linearly with task complexity.
50%UnverifiedSubscription and usage-based billing are two basic pricing structures for software products: subscriptions are more suitable for high-frequency long-term use, while usage-based billing is more suitable for scenarios with large fluctuations in usage frequency, but it brings the problem that users find it hard to estimate the total cost and experience billing anxiety.
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