Lago is an open-source billing platform for usage-based, subscription, credit-based, and hybrid pricing. Companies can deploy its AGPLv3-licensed Open Source edition on their own infrastructure or use Lago’s paid offering through cloud or self-hosted deployment.
Lago participated in Y Combinator’s Summer 2021 batch and later raised $22 million across funding rounds. For companies evaluating usage-based billing infrastructure, Lago’s pricing model creates a choice between a $0 software license for its open-source edition and custom pricing for its paid offering.
Key takeaways
- Lago’s Open Source edition has a $0 software license, while its paid offering uses custom pricing for cloud and self-hosted deployments
- The platform supports usage-based, subscription, prepaid-credit, hybrid, dimensional, and enterprise pricing structures
- Lago includes usage ingestion, metering, invoicing, wallets, entitlements, customer portals, revenue analytics, and integrations with payment, CRM, ERP, and tax systems
- Self-hosting removes the recurring software license for the open-source edition but introduces infrastructure, deployment, monitoring, security, and operational responsibilities
- Total cost depends on deployment model, required paid capabilities, infrastructure, integrations, event volume, implementation, and ongoing billing operations
Understanding Lago’s approach to billing
Open-source and managed deployment
Lago is built around an open-source billing engine distributed under the AGPLv3 license.
The platform can be deployed in several ways:
- Self-hosted Open Source
- Self-hosted paid deployment
- Lago-managed cloud deployment
- Private infrastructure such as a VPC
- On-premises environments
These deployment options address different infrastructure, hosting, and data-governance requirements.
The Open Source edition removes the software license fee, while Lago’s paid offering adds commercial functionality, support, and managed deployment options through custom pricing.
Core billing functionality
Lago processes product-usage events and turns them into billable metrics, charges, credits, entitlements, invoices, and payments.
Its billing capabilities include:
- Usage-based billing
- Fixed subscriptions
- Hybrid pricing
- Prepaid credits
- Usage allowances
- Commitments
- Customer-specific pricing
- Dimensional pricing
- Entitlements and quotas
- Invoice generation
- Payment collection
- Revenue analytics
The platform provides both API-based workflows and an interface for managing billing configurations.
Understanding Lago pricing
Open Source
Lago’s Open Source edition has a $0 software license and is designed for self-hosted deployment.
A current pricing overview lists the Open Source edition as free and includes capabilities such as:
- Usage metering
- Pricing plans
- Coupons
- Add-ons
- Invoicing
- Prepaid credits
- Billing integrations
The software license is free, while the organization remains responsible for the infrastructure and operational resources used to run the deployment.
Paid offering
Lago’s paid offering uses custom pricing rather than a published monthly or usage-based rate.
It can be deployed through Lago-managed cloud infrastructure or within customer-managed environments.
Available capabilities can include:
- Usage ingestion and billable metrics
- Real-time usage and wallet alerts
- Customer portal
- Custom pricing units
- Customer-specific plan overrides
- Prepaid credits
- Multiple billing entities
- Invoice management
- Built-in analytics
- Data pipeline integrations
- AI billing and finance assistants
- MCP support
- Role-based access controls
- SSO
- Audit and API logs
- Implementation support
Other commercial capabilities can include progressive billing, automatic dunning, tax integrations, CRM and accounting integrations, custom branding, and professional services.
What affects total cost
Lago’s total cost depends on more than the license price.
Relevant factors include:
- Deployment model across open source, managed cloud, or paid self-hosting
- Infrastructure required for a self-managed deployment
- Event volume and associated processing requirements
- Integrations across payment, CRM, ERP, tax, and data systems
- Support requirements
- Commercial features and add-ons
- Implementation scope
- Internal engineering and operations resources
Because paid pricing is customized, organizations using similar billing models can have different costs depending on deployment and workflow requirements.
Lago’s usage-based billing capabilities
Usage metering
Lago ingests product-usage events and converts them into billable metrics.
Usage can represent:
- API requests
- Tokens
- Compute
- Storage
- Transactions
- Active users
- Seats
- Devices
- Custom product events
Lago states that its metering infrastructure can process up to one million events per second. This is a Lago-reported platform capacity figure rather than an independent performance benchmark.
Dimensional pricing
Lago supports pricing based on multiple product-usage dimensions.
Examples can include:
- Model type
- Region
- Resource class
- Environment
- Service level
- Usage category
Rates can vary based on attributes associated with usage events.
For AI products, different model types or token categories can therefore carry separate rates within the billing configuration.
Prepaid credits and wallets
Lago provides wallet functionality for prepaid credit models.
Capabilities include:
- Prepaid balances
- Automatic top-ups
- Credit expiration
- Usage drawdown
- Wallet alerts
- Custom pricing units
- Recurring credit allowances
Credits can also be combined with subscriptions or usage-based pricing in hybrid structures.
Subscriptions and hybrid pricing
Lago supports recurring subscription charges alongside metered usage.
Supported structures can include:
- Fixed subscription
- Subscription plus usage
- Included usage plus overage
- Subscription plus credits
- Enterprise commitment plus consumption
- Prepaid usage
Subscription management includes billing cycles, plan assignment, pricing overrides, and prorated changes.
Lago paid-plan capabilities
Customer portal
Lago’s paid offering includes a customer portal for billing and usage information.
Depending on configuration, the portal can surface:
- Usage
- Invoices
- Current balances
- Billing information
- Prepaid credits
- Spending information
Organizations using the Open Source edition can also build customer-facing experiences using Lago’s APIs.
Revenue analytics
Lago includes analytics for revenue, subscriptions, usage, credits, and invoices.
Related workflows include:
- Revenue reporting
- MRR analysis
- Customer-level reporting
- Usage forecasting
- Data exports
- Data pipelines
- AI-assisted financial queries
These capabilities add reporting and revenue-analysis workflows alongside usage metering and billing.
Quotes and enterprise contracts
Lago supports quote and order-form workflows for negotiated contracts.
Commercial terms can include:
- Customer-specific prices
- Commitments
- Credits
- Discounts
- Payment terms
- Enterprise subscriptions
- Negotiated usage rates
Pricing overrides can be applied to individual customer arrangements without changing the broader pricing catalog.
Dunning and cash collection
Lago supports payment collection workflows alongside invoice generation.
Paid functionality can include automatic dunning for failed-payment and collection processes.
Payment status and invoice information can also connect with supported payment providers.
Self-hosting and total cost of ownership
What self-hosting changes
Self-hosting places Lago within infrastructure managed by the deploying organization.
This deployment model can address requirements involving:
- Data residency
- Infrastructure governance
- Security architecture
- Private-cloud environments
- On-premises deployment
- Air-gapped environments
- Internal customization
The organization is also responsible for operating and maintaining that environment.
Infrastructure and operations
A production self-hosted deployment can require resources for:
- Application hosting
- Database infrastructure
- Event processing
- Storage
- Backups
- Monitoring
- Availability
- Scaling
- Security updates
- Incident response
The infrastructure footprint depends on event volume, availability requirements, deployment architecture, and the components used within the environment.
Fixed community estimates therefore provide limited value as general cost benchmarks because deployments can vary substantially.
Engineering ownership
Self-hosting creates internal responsibilities across:
- Deployment
- Upgrades
- Monitoring
- Capacity planning
- Database operations
- Security
- Backup and recovery
- Incident response
A managed cloud deployment shifts more of those platform responsibilities to Lago.
The cost comparison between deployment models therefore involves both direct software spending and internal infrastructure ownership.
Integrations and surrounding revenue systems
Payment integrations
Lago supports integrations with payment providers including:
- Stripe
- Adyen
- GoCardless
Other payment workflows can connect through Lago’s APIs.
Payment collection remains a separate layer connected to Lago through supported integrations and programmatic workflows.
CRM and ERP workflows
Lago supports integrations across CRM, ERP, accounting, and finance systems.
Enterprise workflows include connectivity with systems such as:
- Salesforce
- NetSuite
- SAP
- Accounting platforms
- Tax providers
Some CRM, CPQ, accounting, and tax integrations are part of Lago’s commercial offering or available as add-ons.
Data and analytics
Billing data can connect with analytics and warehouse infrastructure through:
- Data pipelines
- Exports
- Revenue analytics
- API access
- Webhooks
- BI reporting
These workflows allow billing information to feed broader financial and operational reporting systems.
Lago for AI and usage-based billing
AI billing
Lago supports AI products that charge using measures such as:
- Input tokens
- Output tokens
- Cached tokens
- Model type
- API calls
- Compute consumption
- Custom AI usage units
Its platform also includes tooling for collecting usage from supported model providers and gateways.
Dimensional pricing can be used when rates differ by model, workload, or another event attribute.
High-volume metering
Lago reports support for usage ingestion at rates of up to one million events per second.
Actual infrastructure requirements depend on deployment architecture, data stores, availability requirements, usage patterns, and other operational factors.
Pricing analysis
Lago includes fee-estimation endpoints, revenue analytics, and usage forecasting.
These functions support charge estimates and consumption analysis.
Historical pricing simulation is a separate workflow in which proposed pricing is applied to actual past customer usage to estimate potential customer- and revenue-level effects.
Billing-platform evaluations can therefore distinguish between fee estimation, forecasting, pricing configuration, and historical simulation.
Key considerations when comparing billing platforms
Deployment model
Billing platforms can use different deployment approaches:
- Vendor-managed cloud
- Customer-managed cloud
- Private VPC
- On-premises
- Open-source self-hosting
The appropriate model depends on infrastructure ownership, security, reliability, staffing, and data-governance requirements.
Pricing model
Platform pricing can be based on:
- Fixed subscription fees
- Billing volume
- Event volume
- Feature tiers
- Infrastructure usage
- Custom enterprise contracts
Open-source self-hosting adds another dimension because the software license and the infrastructure required to operate it are separate costs.
Metering architecture
Relevant considerations include:
- Usage-event ingestion
- Deduplication
- Aggregation
- Dimensional pricing
- Real-time alerts
- Backfills and corrections
- High-volume processing
- Historical traceability
These capabilities affect how usage data moves through the billing process and how pricing can change over time.
Finance workflows
Billing requirements can extend beyond metering and invoice creation into:
- Accounts receivable
- Collections
- Revenue reporting
- ERP synchronization
- CRM workflows
- Tax
- Data warehouses
- Customer usage visibility
The appropriate platform depends on which workflows remain inside billing infrastructure and which are handled by connected systems.
Pricing evolution
Companies changing pricing frequently may also evaluate:
- Versioned pricing
- Customer-specific pricing
- Scheduled changes
- Historical analysis
- Pricing simulations
- Migration workflows
- Credits and commitments
- Dimensional pricing
These capabilities become increasingly relevant as pricing and customer agreements become more complex.
How Orb supports usage-based billing
Orb provides revenue infrastructure for companies using usage-based, subscription, credit-based, and hybrid pricing. The platform connects raw usage events with pricing, invoicing, customer experiences, and finance workflows.
Historical pricing simulations
Orb Simulations lets teams apply proposed pricing models to real historical usage before changing production pricing.
Teams can use simulations to:
- Compare alternative pricing structures
- Model projected revenue
- Evaluate customer-level impact
- Test new billable metrics
- Analyze pricing for new products
- Prepare pricing migrations
This provides a way to understand the potential financial effects of a proposed pricing model before rollout.
Raw usage events
Orb’s standard metering architecture retains raw usage events for query-based billing.
This supports:
- Historical analysis
- Usage backfills
- Billable metric changes
- Eligible backdated pricing changes
- Usage traceability
- Auditable billing adjustments
Orb can recompute affected mutable billing when eligible usage or commercial terms change, while finalized financial records use explicit adjustment workflows.
For higher sustained volumes, Hosted Rollups provides an additional ingestion path that aggregates configured event streams during ingestion.
Dimensional pricing and billable metrics
Orb’s dimensional price groups support pricing across multiple usage dimensions, such as region, instance type, and environment, using a single pricing configuration for dimension combinations.
Teams can also use custom SQL metrics to transform raw product usage into billable units.
These capabilities allow pricing logic to evolve while the underlying usage-event model remains consistent.
Price evolution
Orb combines pricing configuration with price evolution workflows.
Capabilities include:
- Customer-specific pricing
- Scheduled changes
- Version-controlled pricing
- Historical simulations
- Billable metric changes
- Pricing migrations
- Customer-facing usage experiences
Product and finance teams can work with pricing inside the revenue platform while engineering maintains the underlying usage and integration infrastructure.
Connected finance workflows
Orb connects metering and pricing with invoicing, accounts receivable, collections, reporting, and downstream financial systems.
Its NetSuite integration connects billing records with existing accounting workflows, while Salesforce integration can provision billing from commercial workflows and surface usage information in CRM records.
This provides shared revenue infrastructure across product, engineering, sales, and finance.
Prepaid credits
Orb also supports prepaid credits alongside usage-based and hybrid pricing.
Capabilities include:
- Platform-wide credits
- Item-scoped balances
- Credit expiration
- Automated drawdowns
- Usage-based pricing
- Subscription and hybrid models
This enables credit-based monetization within the same infrastructure used for enterprise invoicing and finance workflows.
Customer outcomes remain specific to each implementation. Vercel reduced the engineering time required to launch billing for new products by 80%, while Stytch reported a 75% reduction in time spent processing bills and invoicing.
Frequently asked questions
How much does Lago cost?
Lago’s Open Source edition has a $0 software license and is designed for self-hosted deployment. Its paid offering uses custom pricing and is available through managed cloud and self-hosted deployment. Total cost can also include infrastructure, implementation, integrations, commercial add-ons, and internal operational resources.
Does Lago support dimensional and hybrid pricing?
Yes. Lago supports dimensional pricing based on product-usage attributes as well as subscriptions, usage charges, prepaid credits, commitments, allowances, and hybrid combinations of these structures.
Is self-hosting Lago free?
The Open Source edition has a $0 software license, but a production self-hosted deployment still requires infrastructure and operational resources. Costs depend on event volume, architecture, availability requirements, storage, monitoring, security, and the engineering resources used to operate the system.
How does Orb support pricing changes?
Orb combines centralized pricing configuration with historical simulations, scheduled changes, customer-specific pricing, custom SQL metrics, and dimensional price groups. Teams can model proposed pricing against historical usage before rollout and manage subsequent price evolution within the same revenue infrastructure.
Why consider Orb for usage-based billing?
Orb connects raw usage events with flexible billable metrics, historical pricing simulations, prepaid credits, invoicing, customer experiences, and connected finance workflows. This gives product, engineering, and finance teams a shared platform for managing usage-based and hybrid monetization as pricing, products, and commercial requirements evolve.