Usage-based billing software is a system that charges customers based on their actual usage of a service or product. Customers only pay for what they use rather than a flat fee.
This software integrates with various systems to collect usage data as per user activity and works on a usage-based pricing model. It processes this data to calculate charges based on predefined metrics, like data volume, transaction counts, or service hours, and associated unit costs. This often involves real-time monitoring using a metering engine and an automated invoicing system.
Usage-based billing software is used in various industries and scenarios where charges are based on the actual usage of services. Some of the common use cases are found in telecommunications, utilities, cloud services, software as a service (SaaS), internet of things (IoT) industries, etc.
Usage-based billing leads to fairer pricing and potentially more revenue, allowing businesses to have better control over spending, resulting in cost-effectiveness. Unlike subscription billing software, which is typically a flat-rate billing system where customers pay a fixed amount periodically regardless of use, usage-based billing adapts to how much the service is used.
To qualify for inclusion in the Usage-Based Billing category, a product must:
Provide a single platform to meter, rate, and bill customers
Monitor and record how much of a service or product is consumed in real-time
Must have a metering engine to provide accurate and up-to-date usage data
Support various pricing structures based on usage, such as per-unit charges, tiered pricing, or volume pricing
Generate invoices based on usage data and the configured pricing model
Provide analytics and reporting features based on usage patterns
