Are usage-based and subscription billing the same?

Yes and no.

1 min read

February 2, 2022

Do you only think of fixed recurring billing when someone mentions subscription billing solutions? You’re not alone. Although fixed recurring subscription billing—think Netflix—has gained popularity (for a good reason, but that’s for another post), SaaS subscription companies offer different subscription products and services, including usage-based subscription billing.

Are usage-based and subscription billing the same?

Yes and no. A subscription business model nurtures an ongoing relationship with a customer and is essentially an open contract. A usage-based billing model is just one of the pricing options available for that subscription. A usage-based subscription—sometimes referred to as a pay-as-you-go subscription—is just that: Customers receive recurring bills according to their service usage within the billing period. The more they use a service, the more they pay; thus, usage-based billing can be a type of subscription (as opposed to fixed recurring billing).

If your business is currently wading through the waters of subscription billing solutions and don’t know where to start or what to look for, check out these best practices from our financial experts.

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