# Pay-as-you-go Pricing

> The pay-as-you-go pricing model means customers pay based on how much they consume.

- **URL**: https://dodopayments.com/glossary/pay-as-you-go-pricing

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## What is Pay-as-you-go Pricing

The pay-as-you-go pricing model means customers pay based on how much they consume. It's a usage-based pricing strategy where there is no fixed fee; instead, the bill varies directly with usage.

## How Pay-as-you-go Pricing Works:

In a pay-as-you-go setup, the billing system tracks a usage metric and multiplies it by a rate.

For example, a cloud service might charge $0.01 per API call, if you make 1,000 calls, you pay $10 that period.

There's often no subscription or flat fee, though sometimes a small base fee may apply. Bills are usually calculated at the end of each cycle (monthly, quarterly, etc.) based on the accumulated usage. This model is common in utility-like services.

## Pay-as-you-go Pricing Benefits:

PAYG pricing can be very attractive to customers because it eliminates upfront costs and aligns spending with actual use.

Customers only pay for what they use, which can be budget-friendly and scalable. For businesses, PAYG can attract price-sensitive customers and open upselling opportunities.

It also encourages efficient use of resources and lowers the barrier for new users.

## Examples:

Classic examples include utilities and mobile plans (you pay for data or minutes used).

## Learn More

- [Usage-based billing fundamentals for SaaS](https://dodopayments.com/blogs/usage-based-billing-saas)
- [How to implement usage-based billing](https://dodopayments.com/blogs/implement-usage-based-billing)
- [A practical guide to metered pricing](https://dodopayments.com/blogs/metered-pricing-guide)