What is Metered Billing?
Definition
A billing method where subscription charges are calculated at the end of each period based on actual usage during that period.
Understanding Metered Billing
Metered billing tracks usage throughout the billing period and charges accordingly at the end. Unlike pre-paid usage tiers, you pay exactly for what you consume. This model is common in cloud computing (AWS, GCP compute hours), communication APIs (Twilio per-message), and AI services (OpenAI per-token).
Metered billing offers fairness (pay for what you use) but introduces budget unpredictability. Most services combine metered billing with a base subscription or usage caps to provide some cost predictability. Monitoring usage dashboards and setting alerts helps prevent unexpected charges with metered billing.
Related Terms
Usage-Based Pricing
A pricing model where customers pay based on how much they use a service rather than a fixed subscription fee.
Overage Charge
An additional fee charged when a subscriber exceeds the usage limits included in their subscription plan.
Billing Cycle
The recurring time period between billing dates for a subscription service, such as monthly, quarterly, or yearly.
Subscription
A recurring payment arrangement where a customer pays at regular intervals to access a product or service.