Pay-per-use pricing is a pricing model where customers are charged based on how much of a product or service they actually use.

Instead of paying a fixed monthly or annual fee regardless of activity, the customer pays in proportion to consumption. That usage may be measured by transactions, seats used, API calls, storage, hours, units processed, or another metric tied to delivery.

This model is designed to connect price more closely to actual consumption. A customer who uses more pays more. A customer who uses less pays less. Because of that, pay-per-use pricing is often seen as flexible, scalable, and easier to justify when usage levels vary across customers.

In B2B, pay-per-use pricing is common in software, infrastructure, platforms, and services where consumption can be tracked clearly. It is especially useful when customer needs are uneven, hard to predict, or likely to grow over time. For the seller, it can create stronger expansion revenue as customer usage increases. For the buyer, it can reduce upfront commitment and make pricing feel more aligned with value received.

The model also has challenges. If the usage metric is unclear, customers may struggle to predict cost. If bills rise too quickly, trust can weaken. And if the pricing metric does not reflect real value, the model can create friction instead of flexibility.

Pay-per-use pricing works best when the usage measure is easy to understand, the connection between usage and value is clear, and customers can monitor what they are consuming. In practice, it is often paired with minimum commitments, base fees, or pricing tiers to create more stability for both sides.