Usage-Based Pricing

Examples: Stripe charges per transaction. Twilio charges per API call. AWS charges per server hour. Benefits: aligns cost with value, easier to start small, naturally expands as customer grows. Drawbacks: unpredictable revenue, customers may optimize usage to reduce spend. Works best when usage correlates strongly with customer value received.

Twilio charges a fraction of a cent per text message sent through its API rather than a flat monthly fee. A customer sending 10,000 messages a month pays proportionally more than one sending 500, so the bill scales directly with how much value the customer is extracting from the product.