Usage-Based Pricing
Definition
Usage-based pricing charges customers based on consumption. Pay for what you use instead of fixed monthly fee.
Extended Definition
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.