# Usage-based pricing

Concept · [Business and metrics](https://ecosystem.samcarlton.com/business)

Also called: usage based, pay as you go, pay-as-you-go, metered billing, metered pricing, consumption pricing, per-token pricing, pay per use

A way to charge where the bill follows how much the customer uses, instead of a [flat fee](https://ecosystem.samcarlton.com/fixed-price-engagement). [Cloud providers](https://ecosystem.samcarlton.com/cloud-provider) and [AI model](https://ecosystem.samcarlton.com/model) providers commonly charge this way.

**For example:** An [AI provider](https://ecosystem.samcarlton.com/model-provider) charges for each [token](https://ecosystem.samcarlton.com/token) a product sends and receives. A month with twice the customer activity brings a bill about twice as large.

## Connects to (16)

- [Per-seat pricing](https://ecosystem.samcarlton.com/per-seat-pricing): A way to charge for software where the customer pays for each person who uses it.
- [Token](https://ecosystem.samcarlton.com/token): In AI, a small chunk of text, roughly a word or a piece of a word, that an LLM reads and writes.
- [Inference](https://ecosystem.samcarlton.com/inference): An AI model producing an answer to a request.
- [Free tier](https://ecosystem.samcarlton.com/free-tier): The part of a paid service that costs nothing, within set limits.
- [Pricing tiers](https://ecosystem.samcarlton.com/pricing-tiers): The set of plans a product sells, from a cheap or free starting plan up to plans for large customers.
- [Serverless](https://ecosystem.samcarlton.com/serverless): A way to run code where the cloud provider sets up and looks after the servers.
- [Egress](https://ecosystem.samcarlton.com/egress): Data leaving a cloud provider's network, for example when a visitor downloads a file.
- [Rate limit](https://ecosystem.samcarlton.com/rate-limit): A cap on how many requests or tokens an account can send to an API in a set period.
- [Reasoning model](https://ecosystem.samcarlton.com/reasoning-model): A model, or a mode of a model, that works through a problem in intermediate steps before it answers.
- [AI chat assistant](https://ecosystem.samcarlton.com/chatbot): A finished app where a person types or talks to an AI model and gets replies in conversation.
- [Amazon Web Services](https://ecosystem.samcarlton.com/aws): Amazon's cloud provider, usually called AWS.
- [Stripe](https://ecosystem.samcarlton.com/stripe): A payments platform.
- [Input tokens](https://ecosystem.samcarlton.com/input-tokens): The tokens an AI product sends to the model on each request: the instructions, the conversation so far, files and tool results.
- [Prefix cache](https://ecosystem.samcarlton.com/prefix-cache): A provider feature that remembers the opening of a request it has just handled.
- [Cache tokens](https://ecosystem.samcarlton.com/cache-tokens): Input tokens the provider did not need to process again because they matched the start of a recent request in its cache.
- [Twilio](https://ecosystem.samcarlton.com/twilio): A cloud service developers use to send and receive text messages, phone calls and email from their apps through an API.

Map view: https://ecosystem.samcarlton.com/usage-based-pricing