Usage-Based Pricing and Consumption Billing: a Complete Guide to SaaS in 2025

The software-as-a-service (SaaS) industry is undergoing fundamental changes in how companies monetize digital products. While fixed-fee models have been prevalent until now, there is currently a shift toward usage-based pricing strategies, as well as hybrid models. These approaches are no longer experimental – they have become the driving force behind both customer acquisition and revenue growth.

Market research confirms this trend: according to Metronome's "State of Usage-Based Pricing in 2025" report, 85% of SaaS companies currently use some form of usage-based pricing (hereinafter: UBP), compared to just 30% of such companies in 2019. This isn't a temporary trend, but a strategic reorientation toward value-based customer relationships, where costs are directly linked to consumption and business outcomes.

Usage-Based Pricing Adoption in SaaS Companies (2019-2025)

Market Acceptance and Regional Dynamics

Global Trends

The adoption of UBP is accelerating worldwide, changing the approach of SaaS providers to generating revenue. Analysts estimate that by 2025, more than 60% of new SaaS revenue will come from contracts that include some form of UBP. This marks a major shift from a time when subscription contracts, whether monthly or annual, were the norm or even exclusive.

Two key factors explain this global proliferation:

• Meeting customer needs is becoming more important for companies. They want prices to be clear and to be able to pay only for the services they use. This reduces customers' risk upon first starting using a service.
• Revenue growth for providers is seen in the form of higher net revenue retention (NRR) as customer bills naturally grow in line with usage and success.

This combination has transformed UBP. It has turned it from an innovative billing solution into a strategic growth engine for SaaS companies.

SaaS Pricing Model Distribution in 2025

Regional Differences

he adoption of UBP has various dynamics across different regions of the world.

North America remains at the heart of UBP adoption. Particularly in sectors such as cloud infrastructure, developer tools, and communications platforms. Companies such as Snowflake and Twilio have shown that usage models can drive hyperscale growth and boost investor confidence.

Europe in its turn is adopting UBP models more cautiously, primarily due to the regulatory environment (e.g. GDPR) and the greater complexity of cross-border billing compliance. However, vertical SaaS in healthcare and financial technology is actively driving UBP adoption, due to specialised workflows requiring flexible SaaS pricing tiers.

The Asia-Pacific region is experiencing the fastest growth, particularly in markets such as India and Southeast Asia, where small and medium-sized enterprises prefer low-risk entry points that can be scaled in line with demand. Here, the UBP billing system serves as a gateway to SaaS adoption, lowering barriers for fast-growing digital enterprises.

Differences in Business Scale

There are clear trends depending on enterprise size:

• Large enterprises embrace UBP for its ability to align IT spending with business outcomes, offering finance teams greater visibility and predictability of costs.
• Small and medium-sized businesses (SMB) adopt it to minimise upfront costs. And at the same time to gain access to enterprise-grade solutions even without high fixed fees.

Both segments see UBP as a path to scalability, but their motivations differ: large enterprises prioritise cost control, while SMB prioritises service accessibility.

SaaS Pricing Model Growth Rates in 2025

Hybrid Pricing Models: A Winning Strategy

The Market's Preference for Hybrid Approaches

Hybrid pricing models became the most popular SaaS Pricing Models in 2025 and fastest-growing SaaS strategy. It's no longer a choice Subscription vs. Usage Pricing, but an alternative to both. Hybrid pricing models combined the predictability of subscriptions with the scalability of UBP. According to market data, 40% of SaaS companies are now using hybrid models, up from only 27% a year ago. These companies have the highest average rate of growth (up to 21%), which is higher than other models: pure subscription (12%) and pure UBP (18%). 

The greatest thing about hybrid pricing is its ability to simultaneously satisfy the demands for different groups:

• Customers can use it more or less according to their needs changing. Plus, the predictability through a base subscription fee. 
• Providers obtain the security of recurring income as well as the potential growth on its own as clients and revenue increase together.

The best SaaS companies have demonstrated the effectiveness of this approach: hybrid models grow 18% faster than single pricing strategies. Remember that the sales team does not play a major role in this growth. Revenue naturally increases with usage, increasing net revenue retention (NRR) and customer lifetime value (LTV).

Design and Architecture for Putting into Action

To make a hybrid pricing model that works, you need to find the right balance between fixed and variable parts so that customers are happy and suppliers make the most money. The following are examples of best practices:

Best practices include:

• It starts with a basic monthly fee that covers the main features and makes things predictable.
• Adding usage fees for things that can grow, like API calls, data processing, or the number of transactions.
• Keeping prices simple while making it clear how to grow in ways that help customers reach their goals.

The Clay hybrid model is a great example of this. It lets customers use as much as they want and pay for it with credit, which lets them scale features and usage on their own while keeping costs clear and predictable.

From a technical point of view, hybrid pricing needs: 

• Reliable usage accounting systems that can accurately keep track of things in real time.
• Billing systems that handle both subscription fees and charges that change based on how much you use the service.
• Customer interfaces that show clear, detailed billing so that customers can better understand and control how much they use.

In conclusion, it can be said that hybrid pricing has gone from being a compromise to the best way for SaaS to succeed in 2025. It offers the best of both worlds: stability and scalability.

Success Stories and Implementation Strategies

Let's examine the regional success stories of SaaS companies and highlight the key factors for success.

US Market Leaders

American SaaS companies pioneered the implementation of many of the world's most successful UBP models, demonstrating the model's ability to scale revenue to unprecedented levels.

• Snowflake is a prime example of success in UBP. The company increased its revenue from $96.7 million in 2019 to over a billion in 2023. Thanks to its consumption-based computing and data storage model! With a net retention rate (NRR) above 170%, Snowflake demonstrates how customer base expansion naturally accelerates as usage increases.
• Twilio has reimagined its communication APIs by adopting UBP approach, and starting charging only for the services used: sent messages, made calls, and authentication checks. This model allows the company to serve both startups and Fortune 500 companies with the same pricing logic! Result: Net dollar retention rates above 130% for several years in a row.
• Stripe demonstrates the benefits of hybrid pricing. The company offers transparent and developer-friendly pricing which easily scales from startup integration to large enterprise deployment by a combination of fixed transaction fees with volume-based pricing tiers. The corresponding growth proves that UBP models can provide a balance between affordability and enterprise-level scalability.

European Innovation and Adaptation

European SaaS providers have developed specific approaches to UBP, driven by regulatory environments and regional customer preferences.

• German SaaS innovators are leading the way in creating hybrid pricing models that blend usage-based scaling with subscription components. Their models often include detailed usage analytics and cost management tools, ensuring budget predictability while maintaining scalability.
• British fintech companies are effectively implementing UBP in the financial services industry by finding a balance between creative billing structures and regulatory compliance. Their success demonstrates that even in highly regulated industries, UBP models can be implemented with quite robust compliance mechanisms in place.

Implementation Examples in Enterprises 

For large enterprises, implementing UBP requires complex strategies for managing tasks, like: procurement complexity, predictability, and alignment with multiple stakeholders. Successful implementations typically use hybrid models which keep a balance between basic cost certainty and scalable usage components.

• AWS remains the industry standard for enterprise-grade UBP. With an annual revenue of $80 billion, his pay-as-you-go SaaS cloud infrastructure model demonstrated how consumption-based billing can accommodate large workloads while maintaining cost transparency and optimization.
• Microsoft in its turn is successfully transitioning into the UBP era with Microsoft 365 Copilot. Businesses can now implement AI-powered productivity tools with flexibility and scalability thanks to this shift, which combines seat-based licensing with consumption-based tiers. And such a hybrid approach shows how even the most established software vendors can transition from perpetual licensing of recurring revenue models to modern consumption models.

Ultimately, regardless of the region, we can see that success depends on a balance between scalability, regulatory compliance, transparency, and customer trust. Whether it's pure UBP models (Twilio, Snowflake) or hybrid structures (Stripe, Microsoft), the evidence is clear: usage-based pricing is not only feasible across various industries and geographical areas, but it is also revolutionizing SaaS at any scale.

How to Manage Predictability and Scalability issues

Budget Predictability Challenge

For many businesses, the biggest doubt about UBP is the unpredictability of the budget. Traditional procurement models rely on a fixed annual cost, which makes it difficult to integrate variable usage fees into a financial planning cycle. Research shows that about 67% of corporate buyers cite unpredictable expenses as their main problem with UBP. 

However, there's a way out:

• Setting up spending limits and automatic alerts when thresholds of 75%, 90%, and 100% are reached helps prevent overspending while maintaining flexibility.
• Using prepaid solutions (companies like Clay offer annual packages with the option to roll over unused funds) which give cost certainty while allowing spending scale UBP within set limits.

These approaches reassure procurement teams by aligning financial discipline with the flexibility of usage-based growth.

Scalability-related Technical Infrastructure

Enterprise-level usage-based billing scaling requires an infrastructure which meets the requirements: 

• Powerful and resilient: capability of handling millions of billable events per month across several service tiers and geographic locations.
• Data Accuracy: Inaccurate billing can cause disagreements and erode confidence. Prior to invoicing, best-in-class systems employ multi-level verification, automatic reconciliation, and thorough audit trails.
• Real-time Monitoring: Both vendors and customers require dashboards with real-time usage data, with trend analysis, and forecasts to optimize their budgets and consumptions.
• Scalability: The system must be able to manage massive amounts of usage data in real-time without sacrificing efficiency.

Thus companies depend more and more on specialized billing platforms that offer accurate data that complies with regulations along with real-time analytics.

These platforms include Zenskar, Metronome, BillingPlatform, and others.

Revenue Recognition and Financial Management

Things that UBP also complicates are: the process of revenue recognition, and financial reporting. Unlike subscriptions, which imply stable recurring revenue, usage-based models require dynamic calculations based on consumption fluctuations.

The necessary adaptations to make things easier:

• Investments in financial systems that handle deferred revenue, accruals, and ASC 606 (a standardized revenue recognition framework) compliance.
• Developing predictive models using ML for more accurate revenue forecasting, taking into account usage history, seasonal variations, and customer growth trajectories.

Ultimately, the success of UBP for businesses depends on pricing strategy, on creating a financial and technical infrastructure capable of ensuring predictability, transparency, and trust on a large scale.

Best Practices and Implementation Strategies

Choosing the Right Cost Metric

The foundation of successful UBP is directly dependent on selecting the right cost metric – the one that directly reflects customer success and business outcomes. The best performance creates a clear correlation between usage and cost values, making pricing as fair and transparent as possible.

Companies should examine their cost metrics using three primary factors:

•  Predictability: Can clients estimate their expenses?
•  Measurability: Can the metric be tracked correctly in real time?
•  Alignment: Does it naturally scale with the delivery of value to the customer?

 Examples of useful cost indicators:

• API Calls: For developer-centric platforms, API calls are precisely aligned with application usage and company growth. Companies such as Twilio and Stripe have established billion-dollar businesses on this foundation.
• Data Processing and Storage: Suitable for analytical and infrastructural platforms where customer value grows with data volume. Snowflake highlights how data-driven metrics can drive organic development while remaining predictable.

Technical Requirements for Implementation

 UBP implementation necessitates a complicated technology stack to ensure accurate and scalable consumption measurement and billing. The mandatory stack components should include:

• Real-time usage tracking measurement tools - for handling large event streams with redundancy and error checks.
• Data validation systems, which are multi tiered architectures that record consumption data at the application level, validate it with some secondary systems, and then combine it into scalable data warehouses.
• Billing automation systems - capable of implementing complicated price rules such as tiered models, volume discounts, promotional offers, and contract-specific terms. The most modern systems employ event-driven architectures, which may process millions of events per hour with response times of less than one second.
• Customer control panels - in order to provide a clear and complete breakdown of consumption and prices.

Customer Training and Change Management

Transitioning from fixed subscriptions to UBP should be preceded by thorough client communication and rigorous change management. Without precise explanations, customers will consider shifting pricing as risky and unpredictable behavior. 

Todo list for providers in such case: 

• Supply with detailed documentation and interactive price calculators so clients may evaluate expenses under different scenarios. 
• Offer real-time monitoring dashboards, as well as use data, and expense alerts. That will give clients a comprehensive insight and sense of control over consumptions. 
• Provide proactive optimization ideas - general or contextual - to help clients efficiently control expenses and create trust in the model. 

The strategic component of UBP success lies not only in the technical billing accuracy, but also in transparency and consumer trust. Now it's clear why the most successful SaaS companies view communication and transparency as key features of their pricing strategy.

Platforms Comparison

Leading UBP Platforms

The UBP platform market has developed and expanded significantly in recent years. Providers often offer comprehensive solutions for implementing and managing UBP models. When choosing a platform, it's important to ensure it meets your business's parameters, like: size, complexity, budget, and integration needs.

For example, let's review two platforms:

• Orb: The platform excels in complex B2B SaaS billing scenarios, supporting multi-metric tracking and sophisticated pricing models. Thanks to its extensive API capabilities and free test environment, Orb allows businesses to thoroughly test billing architectures before full deployment.
• Maxio: A platform focused on B2B SaaS companies with complex contracts. It offers automated revenue recognition in accordance with GAAP, comprehensive reporting, and deep CRM/ERP integration, making it an ideal solution for companies that prioritize financial operations and contract management.

Platform Choice: Large Enterprises vs. Small and Medium-sized Businesses

What are the nuances when the choice depends on the size of the business? For example, enterprise-grade billing platforms must ensure robust regulatory compliance, deep integration, and support for multiple legal entities. But is that true for smaller businesses as well?

Here are two clear examples for comparison: 

• Zuora: It is regarded as the de facto corporate standard, offering considerable customization options, enterprise-grade security, and complying with worldwide standards. However, its complexity and cost can be exorbitant for small SaaS enterprises.
• Chargebee, on the other hand, offers an optimized solution for small and medium-sized enterprises, delivering quick setup, user-friendly interfaces, and key UBP functionality without the expense of enterprise-level solutions. 

The choice of platform should always coincide with the complexity of the company. Large organizations need fully integrated systems with a high level of regulatory compliance, whereas small and medium-sized enterprises thrive with lightweight and adaptable platforms.

Comparative Table: Billing Platforms for Enterprise vs. SMB

Platform	Primary Segment	Key Features	Strengths	Limitations
Zuora	Enterprise	Extensive customization, complex subscription and usage-based models, global compliance (SOX, ASC606, IFRS)	Considered an enterprise standard, high security, deep integrations (ERP, CRM, finance)	Complex implementation, high cost, requires dedicated team
Chargebee	SMB / Mid-market	Easy setup, intuitive UI, supports subscriptions and usage billing	Fast time-to-market, affordable, flexible for growing companies	Limited capabilities for very large contracts
Maxio (ex-Chargify + SaaSOptics)	Mid-market / Enterprise SaaS	Revenue management, revenue recognition, SaaS financial metrics	Strong in analytics and financial operations, comprehensive solution	Less customization flexibility compared to Zuora
BillingPlatform	Enterprise	Full-stack billing & monetization, usage-based support, workflow automation	High flexibility, real-time analytics, compliance-grade accuracy	Too complex for smaller companies
Aria Systems	Enterprise	Subscriptions, usage-based billing, ERP/CRM integration	Scalable and reliable, used by global brands	Complex implementation, costly
Recurly	SMB / Mid-market	Subscriptions, anti-churn mechanisms, flexible payment methods	Easy to use, strong retention tools	Less suited for large enterprises
Stripe Billing	SMB → Mid-market	Simple integration, API-first, supports usage billing	Developer-friendly, flexible API, global payments	Limited enterprise-grade compliance features
Paddle	SMB (SaaS, digital goods)	All-in-one: billing, taxes, payments, compliance	Ideal for startups and SMBs, quick to scale	Not designed for complex enterprise cases
Zenskar	Mid-market	No-code usage-billing setup, revenue recognition	Flexibility, simple implementation, strong usage-based focus	Young platform, fewer large enterprise clients
Metronome	Enterprise SaaS	Real-time usage metering, high-volume event processing	Excellent for usage-heavy SaaS (cloud services)	Complex integration for SMBs

Table takeaway:

• Enterprise-level companies: Zuora, BillingPlatform, Aria Systems, Metronome → built for scale, compliance, and deep customization.
• SMBs / Mid-market: Chargebee, Recurly, Stripe Billing, Paddle → quick setup, ease of use, affordability.
• Hybrid growth solutions: Maxio, Zenskar → balance between SMB simplicity and enterprise functionality.

Integration and Technical Aspects

Regardless of the platform, the success of usage-based billing depends on integration with existing CRM, ERP, accounting, and analytics systems. Companies should prioritize the ecosystem compatibility over the richness of features.

Mandatory integration-related evaluation factors: 

• API Quality and Documentation: Reliable APIs decrease integration complexity, allowing for customization of the workflow and providing long-term flexibility. 
• Developer Support: Accessible resources and clear documentation save implementation time. Another significant plus would be the availability of 24/7 support.
• Security and Compliance: Since billing platforms process sensitive financial and usage data, compliance with PCI DSS, SOC 2, and GDPR standards is a mandatory requirement. Businesses should require confirmation of safety certificates and strict control measures.

The conclusion is simple: the right billing platform is one that integrates seamlessly, ensures regulatory compliance, and scales to meet your evolving business needs.

Future prospects and strategic recommendations

Market Evolution and Trends

The usage-based pricing (UBP) market will grow towards increasingly complicated hybrid models that find a compromise between predictability and scalability. Experts expect that by 2030, more than 90% of SaaS companies will be implementing some type of UBP, making pure pricing models even less common.

Such evolution will be stimulated by various factors: 

1. Artificial Intelligence: AI-based pricing systems will allow for dynamic price modifications depending on customer behavior, market trends, and value realization models. 
2. Personalization: By utilizing customer data and machine learning, organizations will design personalized pricing structures that match specific consumption habits.
3. Outcome-based models: pricing will be based on measurable business outcomes as well, and not only on consumption itself. This will shift the focus in the SaaS economy towards value realization.

Recommendations for Strategic Implementation

For companies considering implementing UBP, the best way starts with hybrid models. Combining subscription predictability with UBP expansion reduces risks and allows teams to gain practical experience before fully transitioning to pure consumption models.

As often: time is crucial. Early adoption is ideal when reaching $5–10 million in ARR - it is much easier than attempting a transition at 100+ million, when customer expectations and processes are deeply ingrained.

Equally critical are investments in billing infrastructure and client training. Companies that implement robust billing platforms and transparent communication methods from the outset consistently experience faster adoption and greater success rates.

Conclusion

 The shift towards hybrid pricing models and UBP models is a fundamental move towards customer value orientation that will define the next generation of successful SaaS businesses. Organizations that welcome this evolution while simultaneously addressing predictability challenges through thoughtful hybrid solutions will ensure sustainable growth and a long-term competitive advantage in an increasingly complex market space.

 At We Can Develop It, we help SaaS companies develop and implement future-proof pricing systems that combine financial predictability, technical scalability, and client trust. Whether you're experimenting with hybrid models or planning for a full transition to consumption-based billing model, our experience ensures that your move to UBP will be a growth accelerator, not a risk factor.

 Together, let's shape the future of SaaS pricing.