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).