Usage-Based Billing

Usage-Based Pricing (UBP), where companies charge their customers based on consumption (AI token usage, API calls, etc.), is popular among AI and DevTool companies as it can increase revenue, ensure profitability, and amplify expansion by enabling organic account growth.

Companies with usage-based billing charge after consumption or have multiple plans with tier limits. For example, an artificial intelligence company can decide to bill their customers after the number of tokens used or GPU execution duration in seconds, resulting in millions of billable events per second that need to be collected, cleaned, and aggregated instantly and accurately.

Working with a large volume amount of usage data poses challenges, particularly in two crucial aspects:

  • Accurate Metering: Ensuring precise metering for accurate billing is a must. Companies need to accurately track resource usage to generate reliable invoices and avoid revenue loss due to undercharging.

  • Real-Time Usage Feedback: Providing real-time usage feedback to your customers is essential for transparency and cost control. However, implementing a streaming aggregation pipeline capable of handling high volumes of billable events in real time is resource-intensive and often beyond the feasible roadmap of many companies.

As a result, organizations often face a dilemma between prioritizing accuracy or real-time usage feedback due to limited resources. Sacrificing accuracy is not an option for billing purposes, leaving them with the choice of sacrificing real-time usage tracking. Billable events are often collected in a data warehouse and processed daily, compromising the immediate feedback loop. This lack of real-time usage feedback exposes customers to potential overconsumption of billable resources, leading to unexpected costs and potential reimbursement claims. For instance, software bugs causing excessive API calls or DDoS attacks generating inflated bills can be problematic in the absence of timely usage feedback to your customers.

OpenMeter solves these challenges by offering a comprehensive solution. It combines accurate metering for precise billing with real-time usage feedback. With OpenMeter, companies no longer have to choose between accuracy and real-time tracking. They can achieve both simultaneously, ensuring accurate billing while providing users immediate visibility into their resource consumption.

Last edited on December 5, 2023