Pay-as-you-go model for SaaS startups

The pay-as-you-go model allows customers to pay only for the actual resources or services they consume. For early-stage SaaS companies, this approach offers unmatched flexibility, reduces entry barriers, and aligns pricing with user value. 

Instead of locking customers into long-term commitments, you let them scale at their own pace, and you grow as they do.

Comparison of pay-as-you-go pricing models

There’s more than one way to design a pay-as-you-go pricing model, which is why we create highly custom pricing platforms for our clients at Orb. 

Here are three of the most common frameworks that SaaS companies use today:

The consumption-based pay-as-you-go model

The consumption-based model bills users strictly based on what they consume (whether that’s storage, API calls, or compute power). It’s the most precise form of pay-per-use pricing model and is widely used in cloud pay-as-you-go pricing models.

Cloud providers like AWS and Azure are leading examples. Customers are billed per gigabyte of data stored or transferred, per second of compute, or per event triggered.

Why it works for SaaS startups:

• It’s ideal for customers with fluctuating needs.
• It aligns revenue with value delivered.
• It enables lean teams to experiment without committing to a full subscription.

Extra tip: This cloud computing pay-as-you-go structure is particularly valuable when building tools with unpredictable or seasonal usage.

The credit-based pay-as-you-go model

In a credit-based pay-as-you-go model, users buy a bundle of credits in advance. Each action they take, like sending an email or using an AI token, consumes a set number of credits.

Mailchimp offers a popular example of this model. Its users can buy email credits and use them as needed, without committing to a monthly plan.

Key benefits:

• Predictable spend with flexible use.
• Bulk discounts encourage higher commitment.
• Useful for users who don’t have steady month-to-month activity.

It’s technically a pay-as-you-use model. Still, it’s often described as part of SaaS pay-as-you-go pricing because it provides the same benefit: Users only pay when they need the product.

The hybrid pay-as-you-go pricing model

The hybrid pay-as-you-go model blends fixed and variable elements. Customers pay a base rate (like a subscription or seat-based pricing) and incur additional charges for usage beyond a set threshold.

This model is common in tools that offer guaranteed value and additional usage-based features. Think of a project management app that includes 10,000 API calls per month, then charges per extra call.

Why hybrid models are rising:

• They provide predictable revenue for the company.
• Users get flexibility for growth and seasonality.
• Tools like Orb, a billing platform with customizable pricing models, make managing this complexity seamless.

It’s a great way to avoid the pitfalls of both purely fixed and purely usage-based systems.

Real-world examples of pay-as-you-go SaaS pricing models

Many of today’s most successful cloud companies owe part of their growth to adopting a pay-as-you-go SaaS pricing model strategy. Here’s how some of them apply it in the real world:

AWS: Defining the cloud pay-as-you-go pricing model

Amazon Web Services (AWS) is the most iconic example of a cloud computing pay-as-you-go platform. Their pricing is fully consumption-based: customers pay only for the compute power, data transfer, and storage they actually use. 

This gives startups the freedom to scale without upfront infrastructure costs, while large companies appreciate the cost-efficiency of avoiding overprovisioning. AWS’s model reflects the purest form of the cloud pay-as-you-go pricing model.

Mailchimp: Credit-based pricing with total flexibility

Mailchimp’s pay-as-you-go model allows users to buy credits in advance and use them to send emails. It’s an ideal solution for companies with irregular communication schedules, such as quarterly newsletters or event-triggered messaging.

This SaaS pay-as-you-go strategy has allowed Mailchimp to broaden its customer base, giving occasional users a practical alternative to monthly subscriptions. It’s a clear case where the pay-as-you-use model improves accessibility without sacrificing profitability.

Microsoft Azure: The power of pay-per-use cloud billing

Azure Blob Storage follows a pay-per-use cloud billing model. Customers pay for what they store, retrieve, or delete, down to the byte. Like AWS, Azure’s pay-as-you-go pricing system is highly granular and caters to dynamic storage demands across industries.

By leveraging the pay-as-you-go model in cloud computing, Microsoft enables businesses to manage costs closely while still accessing enterprise-grade infrastructure on demand.

Twilio: Billing for cloud communications platforms

Twilio’s pay-as-you-go business model changed how developers access communication APIs. Instead of charging large retainers or subscription fees, Twilio bills per SMS, call, or video session.

This granular, usage-based billing structure made Twilio a favorite among startups needing affordable communication tools and helped it scale into a dominant force in billing for cloud communications platforms.

Pay-as-you-go model pros and cons

Bear in mind that pay-as-you-go models aren’t as idyllic as they might sound. You need to weigh out the pros and cons before you commit to such a model:

Pros

• Flexible above all: The pay-as-you-go model grants users the freedom to scale their usage up or down depending on their needs. Customers with fluctuating usage patterns benefit greatly from this, as their costs directly reflect their activity.
• Low barrier to entry: By eliminating upfront costs, the pay-as-you-go model reduces the barrier to entry for new customers. This is particularly attractive to budget-conscious users or those unsure about their long-term commitment to a service.
• Scalable revenue model: The pay-as-you-go model allows your revenue to automatically scale alongside your customer usage. This eliminates the risk of offering a flat fee that undervalues high-usage customers or overcharges low-usage ones. Every customer contributes directly to your bottom line, creating a sustainable revenue stream.

Cons

• Potentially complex pricing structure: Implementing a pay-as-you-go model requires constant monitoring of usage and the creation of billing events. Determining a fair and cost-covering pricing structure based on usage can be challenging.
• Unpredictable costs: While offering control over spending, the pay-as-you-go model can also lead to unforeseen costs, especially if usage isn't diligently monitored.  Customers with irregular usage patterns may find it difficult to budget accurately.
• Perception of lower value: Some customers might associate pay-as-you-go pricing with an inferior product. Showcase your solution so that users of all sizes can see the benefits your SaaS provides to their companies, regardless of your pricing model.

Is the pay-as-you-go model right for your SaaS?

If your customers experience notable fluctuations in usage or if your own costs scale with product engagement, the pay-as-you-go pricing model can help you maintain margins while providing fairness. 

It also provides a lower barrier to entry, making your service more appealing to startups and global markets.

If your product has stable usage and your operational costs are fixed, a subscription model may offer more revenue predictability and simpler implementation. Plus, customers who value consistency might prefer fixed pricing over the variable nature of pay-as-you-go vs. subscription models.

5 tips for implementing the pay-as-you-go model

In the interest of saving you valuable time, here are five tips if you’re feeling ready to start your pay-as-you-go implementation journey:

1. Pick the right pricing: Choose a usage-based, credits-based, or hybrid model that aligns with your product's value proposition and how customers will use it. Strike the right balance between flexibility and predictability.
2. Invest in billing software: Tame the intricacies of pay-as-you-go billing with a robust system. Ingest raw-event data usage, trigger invoices, and manage everything in one place. Seek a solution that integrates with your product and plays nicely with your stack.
3. Empower customers with knowledge: Equip customers with resources like pricing calculators, cost estimators, and usage monitoring tools. Transparency empowers them to control costs and make informed usage decisions.
4. Monitor and optimize for success: Keep an eye on customer engagement. Analyze usage patterns to identify opportunities for scaling or cost reduction while maintaining value. Make strategic adjustments and monitor the impact to fine-tune your model.
5. Make customer support part of your value proposition: Exceptional service translates to loyal users who become your biggest advocates. Resolve issues swiftly, offer guidance on optimizing spend, and build strong relationships.

FAQs

How does pay-as-you-go pricing work for cloud software?

Pay-as-you-go pricing in cloud software means they charge users based on the actual resources they consume, such as compute, storage, or bandwidth. There are no fixed fees; billing adjusts automatically to usage levels. 

This approach allows for scalable costs that match customer needs in real time.

How does the pay-as-you-go model of a SaaS firm contribute to better software quality for users?

The pay-as-you-go model contributes to better software quality because SaaS firms deliver measurable value, as revenue depends on usage on a continuous basis. It pushes teams to optimize performance, reduce friction, and prioritize features that customers actively engage with.

How does token-based pricing work for the pay-as-you-go plan?

In token-based pay-as-you-go pricing, users pre-purchase tokens that are consumed with each action, like an API call or AI inference. 

Each token represents a unit of usage, and once consumed, users must replenish their balance. It offers a flexible way to align pricing with actual engagement without long-term commitments.

What’s the difference between pay-as-you-go vs. pay-as-you-use?

The difference is “pay-as-you-go” typically refers to real-time billing per unit consumed, while “pay-as-you-use” can also include prepaid credit models like token systems. 

People often use the two terms interchangeably, but pay-as-you-use may imply more flexible billing cycles. Both fall under the broader umbrella of usage-based pricing.

Next steps: Build a smarter pay-as-you-go model with Orb

If you’re ready to implement a flexible and scalable pay-as-you-go pricing model, you don’t need to start from scratch

Orb is a done-for-you billing platform that helps SaaS and GenAI companies unlock the full potential of usage-based billing. 

Whether you're shifting away from flat-fee subscriptions or designing a hybrid structure that blends pay-per-use cloud features with seat-based pricing, Orb provides the infrastructure, insight, and flexibility to make your pricing strategy work. Here’s why Orb is the way to go:

• Event-based billing accuracy: Orb’s core engine, Orb RevGraph, ingests raw event data at scale and transforms it into accurate, auditable invoices. You can trust that every API call, token processed, or gigabyte stored will be billed precisely, reducing revenue leakage and billing disputes.
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• Agile pricing experimentation with real data: With tools like the Orb SQL Editor and Orb Simulations, business teams can model pricing scenarios using historical or real-time usage. 
  
  Simulate changes across customer segments, forecast revenue outcomes, and confidently iterate on your pay-as-you-go SaaS pricing without ever putting production revenue at risk.

• Support for complex pricing models: Whether you're rolling out a consumption-based product, a credit-based pay-as-you-use model, or a hybrid plan with overages, Orb’s usage data is fully decoupled from your codebase. 
  
  That means you can launch new plans, version existing ones, and apply customer-specific pricing rules without manual effort or platform migration.

• Extensible and integrated by design: Orb connects natively with modern data stacks and financial systems. With Orb’s powerful API and modular architecture, your team gains a centralized source of truth for usage, billing, invoicing, and revenue analytics, scaling effortlessly as you grow.
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• Built for hybrid billing realities: SaaS companies rarely choose between usage-based or subscription pricing. They use both. Orb was designed to support billing for cloud communications platforms, seat-based licensing, and event-based usage, all within one unified system.
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• Strategic partnership and support: From implementation to rollout and ongoing optimization, our team works with you to fine-tune pricing, improve financial forecasting, and scale with confidence. You’ll gain access to industry benchmarks, best practices, and guidance at every step.

Orb gives you everything you need to launch and scale a modern, efficient, and transparent pay-as-you-go business model, with accuracy, agility, and peace of mind. Explore Orb’s flexible pricing tiers and discover how Orb can turn your usage data into your growth lever.