SaaS & Startupadvanced
Usage-Based Pricing
Definition
A pricing model where customers pay based on how much they use the product, such as API calls, messages sent, emails processed, or gigabytes stored.
Why it matters
Usage-based pricing lowers the barrier to entry (low initial cost) and scales revenue with customer success. Customers who get more value pay more, a virtuous cycle.
Example
Twilio charges per SMS sent and per API call made. A small business pays pennies monthly; a large enterprise sending millions of messages pays thousands.
Related terms
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