Set up usage-based pricing models

Set up usage-based pricing models for your subscriptions.

Usage-based pricing enables you to charge based on a customer’s usage of your product or service. Usage-based pricing includes models such as:

Fixed fee and overage
Pay as you go
Credit burndown

Fixed fee and overage

Use the fixed fee and overage model to charge a flat rate per month for your service at the beginning of the period. The flat rate has some included usage entitlement, and any additional usage (overage) charges at the end of the period.

You can use the Stripe Dashboard or API to set this up with two prices within the same product. For example, imagine an AI business called Hypernian introduces an advanced model called Hypernian Pro. Priced at 200 USD per month, this model includes 100,000 tokens. They charge any usage above the included tokens at an additional rate of 0.001 USD per token.

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 Hypernian example, enter “Hypernian.”
- (Optional) For Description, add a description that appears at checkout in the customer portal and in quotes.
- Under Billing period, select More pricing options.
On the Add price page, do the following:
- Under Choose your pricing model, select Flat rate.
- Under Price, set the Amount to 200 USD.
- Click Next
To add a second recurring price to the product, click Add another price on the Add a product page.
On the Add price page, do the following:
- Under Choose your pricing model, select Usage-based, Per tier, and Graduated.
- Under Price, create two graduated pricing tiers:
  First unit Last unit Per unit Flat rate
  First tier 0 100,000 0 USD 0 USD
  Second tier 100,001 ∞ 0.001 USD 0 USD
Under Meter, create a new meter to record usage. For the Hypernian example, use the meter name “hypernian_api_tokens.”
Click Next.
Click Add product. When you create subscriptions, specify both prices.

	First unit	Last unit	Per unit	Flat rate
First tier	0	100,000	0 USD	0 USD
Second tier	100,001	∞	0.001 USD	0 USD

Pay as you go

The pay as you go model (also called “in arrears billing”) lets you track usage incurred over a determined period, then charge the customer at the end of the period.

You can use any of the following pricing strategies:

Per unit: Charge the same amount for each unit.
Per package: Charge an amount for a package or bundle of units or usage.
Volume-based pricing: Charge the subscription item at the tier that corresponds to the usage amount at the end of the period.
Graduated pricing: Charge for the usage in each tier instead of applying a single price to all usage.

This model might cause customers to accumulate significant usage, and affect their payment method status at the end of the month.

Credit burndown

The credit burndown model lets you collect prepayment for usage-based products and services. Customers can use billing credits to pay an initial amount, and then apply their billing credits as they use the product.

For example, Hypernian wants to sell a large enterprise contract to an existing self-serve customer for their new Hypernian Model. The customer commits to pay 100000 USD up front for Hypernian, so they can get 120000 USD of billing credit usage to use within 1 year.

Collect prepayment from a customer

On the Invoices page, click Create invoice.
Select your customer from the Customer dropdown.
Select the correct currency from the Currency dropdown.
Under Items, select Add a new line item.
Under Item details, do the following:
- For Item, enter “Hypernian Credits.”
- For Price, enter “100,000.”
- Click Save.
Click Send invoice.

After your customer pays the invoice, you can grant them billing credits.

Grant billing credits to a customer

On the Customers page, select the customer name.
On the customer page, under Credit grants, click the plus (+) symbol.
On the New credit grant page, do the following:
- For Name, enter a name for your credit grant.
- For Amount, specify the amount of the credit grant. For the Hypernian example, enter “120,000.”
- Under Expiry date, specify the date, if any, when the credits expire. For the Hypernian example, select Specific date and set a date 12 months from now.
- Click Create grant.