Set up a flat fee and overages pricing model

Charge customers a flat rate with the option to pay for additional usage in arrears.

Flat fee with overages combines predictable billing with the flexibility to scale. Customers pay a set recurring fee for a base package, and any usage beyond that limit is billed separately. This model works well if you want steady, reliable revenue while still giving customers room to grow. The base fee covers core value, while overages ensure that heavy users pay in proportion to what they consume. For example, if you run a video hosting platform, you might include 1,000 monthly video streams in a 200 USD flat fee. If a customer streams more than that, each additional stream is billed as an overage. At the end of the month, Stripe sends an invoice that combines the flat fee with any usage above the included limit, automatically charging the customer’s payment method on file or prompting them to add one.

What you’ll build

In this guide, build a flat fee and overages pricing model for a fictional company called Alpaca.ai, which provides LLM. They charge customers at the following rates:

License	Fee
Per user	100 USD

Usage	Fee
0-1000	0 USD
1000+	0.04 USD

To implement this model, you create meters to record the usage, products and prices to represent your service, a customer, and a customer subscription.

Create a meter

Meters specify how to aggregate meter events over a billing period. Meter events represent all actions that customers take in your system (for example, API requests). Meters attach to prices and form the basis of what’s billed.

For the Alpaca AI example, meter events are the number of tokens a customer uses in a query. The meter is the sum of tokens over a month.

You can use the Stripe Dashboard or API to configure a meter. To use the API with the Stripe CLI to create a meter, get started with the Stripe CLI.

On the Meters page, click Create meter.
On the Create meter page, do the following:
- For Meter name, enter the name of the meter to display and for organization purposes. For the Alpaca AI example, enter “Alpaca AI tokens.”
- For Event name, enter the name to display in meter events when reporting usage to Stripe. For the Alpaca AI example, enter “alpaca_ai_tokens.”
- Set the Aggregation method in the dropdown:
  - For the Alpaca AI example, select Sum. This will sum the values reported (in this example, number of tokens a customer uses) to determine the usage to bill for.
  - Choose Count to bill based on the number of events reported.
  - Choose Last to bill based on the last value reported.
  - Use the preview pane to set example usage events and verify the aggregation method.
- Click Create meter.
- (Optional) Under Advanced settings, specify the Dimensions that you want to tag your usage data with. To generate granular segment specific alerts, or to granularly price usage based on a combination of attributes, submit your usage data with dimensions that are populated for analytics and reporting. Some example dimensions are LLM model, token type, region, and event type.

Create a pricing model

Use the Stripe Dashboard or API to create a pricing model that includes your Products and their pricing options. Prices define the unit cost, currency, and billing period.

For the Alpaca AI example, you create a product with a metered price of 0.04 USD per hundred units, billed at a monthly interval. Use the meter that you created in the previous step.

On the Product catalog page, click Create product.
On the Add a product page, do the following:
- For Name, enter the name of your product. For the Alpaca AI example, enter Alpaca AI usage.
- (Optional) For Description, add a description that appears in Checkout, in the customer portal and in quotes.
- Select Recurring.
- Under Billing period, select More pricing options.
On the Add price page, do the following:
- Under Choose your pricing model, select Usage-based.
- Choose your pricing structure:
  - For the Alpaca AI example, select Per Tier and Graduated.
  - In the first row of the grid, set First unit to 0, Last unit to 1,000, Per unit to 0 USD, and Flat fee to 0 USD.
  - In the second row of the grid, set First unit to 1,001, Last unit to ∞, Per unit to 0.04 USD, and Flat fee to 0 USD.
  - Below, you will create another price to charge customers the 100 USD fee at the beginning of the month. A customer’s second invoice contains their usage fees from the previous month and their license fee for the upcoming month.
  - (Optional) If you want to bill customers the initial license fee at the end of the month, update the first row of the grid to set the Flat fee to 100 USD.
- Under Meter, select the meter you created previously. For the Alpaca AI example, select Alpaca AI tokens from the dropdown.
- Select the Billing period. For the Alpaca AI example, select Monthly.
- Click Next.

Next, create the 100 USD monthly fee.

On the Product catalog page, click Create product.
On the Add a product page, do the following:
- For Name, enter the name of your product. For the Alpaca AI example, enter Alpaca AI license fee.
- (Optional) For Description, add a description that appears in Checkout, in the customer portal and in quotes.
- Select Recurring.
- Under Billing period, select More pricing options.
On the Add price page, do the following:
- Select *Recurring.
- For Amount, enter 100 USD.
- For Currency, select USD.
- For Billing Period, select Monthly.
- Click Add Product.

Create a customer

Next, create a customer.

On the Customers page, click Add customer.
On the Create customer page, do the following:
- For Name, enter the name of your customer. For the Alpaca AI example, enter John Doe.
- (Optional) Add an email address and description for your customer.
- Click Add customer.

Create a subscription

Subscriptions allow you to charge recurring amounts by associating a customer with a specific price.

Use the Stripe Dashboard or API to create a subscription that includes your customer, product, and usage-based price.

For the Alpaca AI example, you create a subscription for the Alpaca AI usage product and Alpaca AI license fee product.

Note

You can associate a single metered price with one or more subscriptions.

When you create a billing_mode=flexible subscription, Stripe excludes metered line items from the first invoice since no prior usage exists to bill. Stripe creates an invoice only if the subscription is backdated with previously accrued usage or if pending invoice items exist. When you create a billing_mode=classic subscription, Stripe generates a zero monetary value invoice line item for each metered subscription item.

On the Subscriptions page, click Create test subscription.
On the Create a test subscription page, do the following:
- Under Customer, select the name of your customer. For the Alpaca AI example, select John Doe.
- Under Product, select your price. For the Alpaca AI example, select the price under Alpaca AI usage and Alpaca AI license fee.
- (Optional) Modify the subscription details and settings as needed.
- Click Create test subscription.

Send a test meter event

Use Meter Events to record customer usage for your meter. At the end of the billing period, Stripe bills the reported usage.

You can test your usage-based billing by sending a meter event through the Stripe Dashboard or API. When using the API, specify the customer ID and value for the payload.

After you send meter events, you can view usage details for your meter on the Meters page in the Dashboard.

On the Meters page, select the meter name. For the Alpaca AI example, select Alpaca AI tokens.
On the meter page, click Add usage > Manually input usage.
On the Add usage page, do the following:
- Select your customer from the Customer dropdown.
- For Value, enter a sample value. For the Alpaca AI example, enter 3000.
- Click Submit.

Create a preview invoice

Create a preview invoice to see a preview of a customer’s invoice that includes details such as the meter price and usage quantity.

On the Subscriptions page, select a subscription. For the Alpaca AI example, select the subscription for Jenny Rosen.
On the subscription details page, scroll down to the Upcoming invoice section. The preview invoice shows the subscription amount to bill the customer on the specified date.
Click View full invoice to see complete details for the upcoming invoice, including:
- Customer
- Billing method
- Creation date
- Connected subscription
- Subscription details (usage quantity and meter price)
- Amount due
Because Stripe processes meter events asynchronously, upcoming invoices might not immediately reflect recently received meter events.

OptionalRetrieve usage for a custom time period

Use the Meter Event Summary to retrieve total usage for a custom time period. The meter event summary returns a customer’s aggregated usage for a period, based on the aggregation formula defined by the meter.

In the Alpaca AI example, the meter event summary returns the sum of tokens for a specific customer, meter, and time window.

Because Stripe processes meter events asynchronously, meter event summaries might not immediately reflect recently received meter events.