Pay-as-you-go or usage-based pricing is a model where customers only pay for what they use—whether it’s API calls, storage, minutes, transactions, or other measurable units. The more they use, the more they pay.
Why it matters for startups
This model is scalable and flexible, making it attractive for both startups and their customers. It lowers the barrier to entry, aligns cost with value delivered, and naturally grows revenue as customer usage increases—something investors love to see.
What’s the difference between pay-as-you-go and subscription pricing?
Subscription charges a flat recurring fee. Pay-as-you-go charges based on actual usage, making it more flexible but less predictable.
How do I avoid bill shock for customers?
Be transparent with usage dashboards, alerts, and billing summaries. Predictability builds trust.
Can I combine pay-as-you-go with other models?
Yes. Many startups use hybrid models—like a base subscription + usage-based add-ons—for more stable revenue and scalability.
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