Usage-based billing

Plans supporting this feature: Growth Enterprise

A Usage-based billing product is a product where customers are billed based on their actual usage of a service or product rather than a fixed rate. The usage is tracked during a billing period, and the total cost is calculated according to the quantity of resources consumed. This model is often used for services where usage fluctuates, allowing customers to pay only for what they use. There are different types of pricing models that can be applied to calculate the bill for the usage

Key Benefits:

• Flexible Billing: Customers are only charged for the resources they consume, making the pricing fair and adaptable to varying needs.

• Scalability: As customers' usage grows, the metered billing automatically scales, aligning charges with their consumption.

• Cost Efficiency: Reduces the need for fixed, high-priced plans, ensuring customers only pay for the exact amount of service they use.

Create Usage-based billing product

1. Navigate to Configurations > Product catalogue > Usage-based billing.
   

2. In the top right corner, click on New.

3. This will open up the page to create a usage-based billing product.

Information Section

1. Name (Required):

   • Enter a unique name for the usage-based billing product. This name should clearly describe what the usage is for, such as "Data Usage" or "API Calls."

2. Handle (Required):

   • This field is for the unique identifier (handle) of the  usage-based billing product. This is auto-generated, but you have the flexibility to modify it. The handle is typically used internally for API integration or in code, so it should not contain spaces or special characters.

3. Description:

   • Provide a detailed description of the usage-based billing product. This is optional, but helpful for others to understand what this usage type is for.

Pricing Section

1. Currency (Required):

   • Select the currency in which the pricing will be applied. The options include various currencies like Danish Krone (DKK), Euro (EUR), etc.

2. Define the Unit (Required):

   • Enter the unit of measurement for the usage. For example, this could be "GB" for data usage or "API call" for an API usage model.

3. Included Units (Required):

   • Specify how many units are included in the base price. For instance, if 10 GB of data is included in the base plan, you would enter "10" here. If no units are included and usage is fully billed, set this value to 0.

4. Minimum Fee (Required):

   • Define the minimum fee. Even if no usage occurs, this fee will apply to ensure a base charge for the service.

5. Pricing Model:

   • Select the pricing model that applies. For more information on the different pricing models that are available, click here.

6. VAT:

   • Set the VAT (Value Added Tax) status either via the Tax Policies configured or set a custom VAT rate.

   • Incl. VAT: Toggle this option on if VAT is included in the price. If VAT is excluded, leave it unchecked.

7. From  - To

   • When defining a usage-based billing product, you need to define usage ranges.

   • From:

     • This field specifies the lower boundary of the usage range and always starts with 0.

     • Each new range will start from where the previous range left off. For instance, if the first range ends at 100, the next one should start from 101.

       Note

       As of now, we only allow for whole number units to be set up and they increment by 1 for the next range. Please reach out to us if your use case depends on decimal point increments.

   • To (Required):

     • This field defines the upper boundary for each range.

       Note

       The value for To in the last row is always set to “Unlimited”.

Pricing Calculator

This is a helper tool that allows you to test your pricing model configuration. Once you are done setting up the usage-based billing product, you can verify how the model will be used to price the customer based on the actual units consumed.

How would you like to calculate the usage?

1. Sum of All Usages

• Description: This strategy calculates the total usage by summing all individual usage events over the billing period of the plan to which the usage-based billing product is mapped.

• Use Case: Ideal when you need to charge customers based on the total amount of resources they consume, such as data usage, number of API calls, or minutes used.

• Example: If a customer makes 100 API calls on Monday, 200 on Tuesday, and 300 on Wednesday, the total usage for that billing period would be 600 API calls.

• How It Works:

  • Every usage event reported to the API is accumulated.

  • At the end of the billing period, the total amount is used to calculate the charge based on the configured pricing model.
    

2. Maximum of All Usages

• Description: This strategy calculates the usage based on the highest single usage event recorded during the billing period.

• Use Case: Useful for services where you need to charge customers based on peak usage, such as bandwidth consumption or storage space allocation.

• Example: If a customer uses 5 GB on Monday, 7 GB on Tuesday, and 10 GB on Wednesday, the total charge will be calculated based on the 10 GB, which was the maximum usage during that period.

• How It Works:

  • The API logs each usage event, but only considers the highest recorded value within the billing period when calculating the charge.

  • This strategy ensures that customers are billed according to their peak consumption.
    

3. The Latest Usage

• Description: This strategy uses the most recent usage event reported to the API as the basis for calculating the charge.

• Use Case: Ideal when you want to track and charge for the most recent state or snapshot of a customer's usage, such as the number of active users at the end of the billing period.

• Example: If a customer's system usage was 50 units on Monday, 70 units on Tuesday, and 60 units on Wednesday, the charge would be based on the 60 units from Wednesday, which is the latest recorded usage.

• How It Works:

  • The API records each usage event, but only the most recent value is considered when calculating the final charge at the end of the billing period.

  • This approach is suitable for services where only the most recent state matters for billing purposes.
    

For more information on how to configure and use these strategies, refer to the API documentation or contact support for further assistance.

Add usage-based billing product to the subscription (manually)

You can add a usage-based billing product to the subscription while creating it.

1. After selecting the plan, scroll down to section where all the Subscriptions options are.

2. Click on Add Usage-based billing product.
   
   

3. Choose the desired usage-based billing product.

4. While adding a usage-based billing product, there are additional options that are available:

   How would you like to manage the unbilled usage?

   • You can choose to either write it off or bill it in the next billing cycle. This is particularly useful if you have removed a usage-based billing product from a subscription and have to add it again within the same billing cycle.

   Select your preferred pricing strategy

   • Fixed price means that the currently valid price is always billed.

   • Flexible price means that the price automatically changes if the price of the usage-based billing product is changed.

   • Use Custom if you want to completely change the price of the usage-based billing product for this specific subscription.
     

5. Click on Confirm to add the usage-based billing product to the subscription.

Add usage-based billing product to the subscription (automatically)

While creating a usage-based billing product, enable the setting “Enable Auto-add to Subscription on Usage” so that the usage-based billing product is automatically added to the corresponding subscription when usage is reported.

Different Pricing Models for usage-based billing products

1. Per Unit (Flat Pricing)

In this model, the price is based on the number of units (such as licenses, seats, or other metrics), and the price per unit depends on predefined quantity ranges. The cost structure is flat within each range. Once the range is reached, a different price applies.

Example:

• The first 5 licenses are free.

• For 6 to 10 licenses, each license costs € 5.

• For 11 to 20 licenses, each license costs € 4.

For example, if a customer purchases 17 licenses:

• The first 5 licenses are free.

• The next 12 licenses (17 - 5 = 12) are charged at € 4 each.

Total Cost for 17 licenses:

12 licenses x € 4 = € 48.

2. Per Unit - Step (Graduated Pricing)

The "Step" model involves progressive pricing. As the quantity increases, each new block of units is charged at a higher or lower rate, with each tier priced independently.

Example:

• The first 5 licenses are free.

• For 6 to 10 licenses, each license costs € 5.

• For 11 to 20 licenses, each license costs € 4.

For example, if a customer purchases 17 licenses:

• The first 5 licenses are free.

• The next 5 licenses (6 to 10) are charged at € 5 each.

• The remaining 2 licenses (11 to 17) are charged at € 4 each.

Total Cost for 17 licenses:

(5 x € 0) + (5 x € 5) + (2 x € 4) = € 33.

3. Per Tier (Volume Pricing)

In the "Per Tier" model, users pay for blocks or tiers of usage. Each tier has a fixed price, and once a user moves to a higher tier, they pay a set price for that tier, regardless of the specific number of units consumed within that range.

Example:

• The first 5000 API calls are free.

• For 5001 to 8000 API calls, the user is charged € 20.

• For 8001 to 10,000 API calls, the user is charged € 30.

If a user makes 9000 API calls:

• The first 5000 API calls are free.

• Since the usage is between 8001 and 10,000, the user will be charged € 30.

Total Cost for 9000 API calls: € 30.

4. Per Tier - Step (Graduated Volume Pricing)

This model combines the "Step" concept with tier-based pricing, where the user is charged progressively as they move through different tiers, and each new block of usage incurs a separate charge.

Example:

• The first 5000 API calls are free.

• The next 3000 API calls (5001 to 8000) are billed at € 20.

• From 8001 to 10,000 API calls, the user is billed at € 30.

If a user makes 9000 API calls:

• The first 5000 API calls are free.

• The next 3000 API calls are billed at € 20.

• The remaining 1000 API calls (8001 to 9000) are billed at € 30.

Total Cost for 9000 API calls:

€ 20 + € 30 = € 50.

The following TWO pricing models are built exclusively for calculating revenue share.

Percentage and Percentage-Step Pricing Models

Special Considerations for Percentage and Percentage-Step Models

1. Configuring the Amount in Included Units and the From - To Ranges

   In percentage and percentage-step pricing models,  unit ranges (from - to ranges), Included units and consumed/used unit counts represent monetary values in their smallest denomination (e.g., paisa, øre,  pence).

• Cents – In the US dollar (USD) system, 1 dollar = 100 cents.

• Cents - In the Euro (EU) system, 1 euro = 100 cents.

• Øre - In Danish Krone 1 krone = 100 øre

• Pence – In British Pound Sterling (GBP), 1 pound = 100 pence.

When setting the amounts for the range from and to, ensure that you also incorporate the subunits. For instance, if you wish to set the range from 10 EUR to 500 EUR, you should enter it as 1000 to 50000.

2. Support for Currencies with up to three decimal places
   The platform supports currencies with up to three decimal places, including:

• BHD (Bahraini Dinar)

• JOD (Jordanian Dinar)

• KWD (Kuwaiti Dinar)

• OMR (Omani Rial)

• TND (Tunisian Dinar)

For currencies with three decimal places, all amounts must be rounded to the nearest ten units of the smallest denomination before use.

Example:

• Raw amount: 10,234.254 TND

• Rounded: 10,234.25 or 10,234.26

Always round and convert values correctly before reporting or applying them within percentage or percentage-step models.

1 Percentage-Based Pricing

In this model, the user pays a single percentage of the processed value, based on the applicable value range.

Example:

• € 1 – € 50,000 → 2.30 %

• € 50,001 – € 150,000 → 1.85 %

• € 150,001+ → 0.95 %

If a customer processes € 175,000, the entire amount falls in the € 150,001+ range, so the charge is:

• 0.95 % × € 175,000 = € 1,662.50

2 Percentage-Step (Graduated Percentage Pricing)

This model applies different rates to each portion of the processed value, rather than a single percentage on the total.

Example:

• € 1 – € 50,000 → 2.30 %

• € 50,001 – € 150,000 → 1.85 %

• € 150,001+ → 0.95 %

If a customer processes € 175,000, the breakdown is:

• € 50,000 × 2.30 % = € 1,150

• € 100,000 × 1.85 % = € 1,850

• € 25,000 × 0.95 % = € 237,50

• Total = € 3,237.50