Think of your mobile data plan. Some people use it a bare minimum to check what's happening around them, while others use it to stream videos, join video calls, and download large files every day. That’s why most of the providers offer pay-as-you-go plans, where you can pay for the actual amount of use. That's very much fair, flexible, and custom to everyone's needs. The pricing plans in the SaaS industry work the same.
Traditionally, most software companies have stuck to fixed, subscription pricing models — charging a flat monthly or yearly fee no matter how much you actually use the product. And while that might work for some, it often feels unfair to businesses whose usage changes from month to month. Why pay for features or capacity you’re not using? That’s exactly where the pay-as-you-go pricing model comes in.
In this blog, we’ll break down what pay-as-you-go means for SaaS businesses, the different ways you can structure it, how to tell if it’s the right fit for your business, and some practical tips for putting it into action.
Many software pricing models expect customers to commit upfront, whether they use it fully or a little. The pay-as-you-go model is just the opposite of this. Here, the model offers customers unparalleled flexibility by allowing them to scale their usage up and down according to their requirements. It is a billing structure that blends scalability and transparency, placing customers at the head. This can lead to increased loyalty among customers as they are only charged for what they consume.
Here’s a quick glance at three of the most popular pay-as-you-go plans:
In this plan, customers are billed only based on the services they consume. This model is widely adopted by cloud storage providers or services with fluctuating usage. For startups or early-stage SaaS companies that consistently don't require heavy resources, this approach helps keep costs low and predictable, while giving them the flexibility to scale up as their needs grow. This model requires close monitoring to avoid surprise charges, particularly for businesses with fluctuating demand.
In this plan, customers purchase a set amount of credits upfront to access your SaaS product. This setup is ideal for organizations that prefer upfront cost control or those operating within set budgets. While this approach benefits users with stable usage patterns, it may not be the best fit for those whose usage frequently changes. To get around this, a lot of SaaS providers offer bulk discounts as an incentive for customers to purchase larger credit bundles upfront.
The hybrid plan is the best combination of the previous two. In this plan, customers pay a base amount upfront for a specified service level and incur extra charges if they exceed the usage level. A hybrid plan is an ideal solution for businesses with generally consistent needs and occasional peak periods. This gives your business a predictable income while getting more revenue from heavy users. For users, this offers the flexibility to handle occasional spikes in usage without worrying about unexpected costs.
While flat-rate and tiered pricing models are widely used in SaaS, they aren’t the best solution for every business. In some situations, offering a pay-as-you-go option alongside your existing pricing plans can unlock new revenue opportunities. This can improve customer satisfaction, and reduce churn. Here’s when it makes sense for subscription businesses to consider adding PAYG to their pricing strategy:
If your product appeals to customers with specific, limited needs, an à la carte pricing option can make sense. Rigid subscription pricing models can sometimes create friction. Introducing a pay-as-you-go option lets you cater to these customers by charging them only for the services they actually use.
If you’re finding that some potential customers don’t neatly fit into your existing pricing tiers, it could mean you’re leaving money on the table. Introducing a PAYG option allows you to accommodate those users who fall between plans. It helps you win over customers who’d otherwise hold back from committing.
If you’re seeing customers frequently hit overage charges or constantly switching between plans, it usually means your plans aren’t flexible enough. A pay-as-you-go option alongside your existing plans can help better serve these users, helping you retain accounts that might otherwise churn over pricing frustrations.
Some customers value control and predictability over bundled services. When customers seek more transparency and control over what they’re billed for, it’s a signal your pricing might be too rigid for some segments. In this case, a pay-as-you-go plan can be a smart addition — helping you keep those customers happy and loyal.
While pay-as-you-go pricing offers flexibility and transparency, it’s not the right fit for every SaaS product or business model. In certain cases, sticking to a flat-rate or tiered subscription makes better financial and operational sense. Here’s when the model might work against you:
If your customers typically maintain a steady, predictable usage month after month, simpler models like flat or tiered pricing are usually a better fit. A pay-as-you-go model can overcomplicate billing in these situations without offering meaningful benefits for you or your customers. It also makes revenue forecasting easier.
SaaS businesses rely on steady, reliable cash flow for growth, hiring, and operational planning. If your customer base uses your product at a fairly consistent level, there’s little benefit in offering a pay-as-you-go plan. In this scenario, introducing a pay-as-you-go option can complicate billing without adding meaningful value for your customers or your business.
If your customers rely on multiple interconnected features, or if your product requires significant onboarding and ongoing support, the pay-as-you-go pricing might overcomplicate things for both you and your customers. In such cases, a pay-as-you-go model might not be necessary and could end up complicating both pricing and customer experience.
If your expenses remain steady no matter how customers use your product, a pay-as-you-go model can strain your margins. When revenue fluctuates but costs don’t, it makes financial planning tougher. In these situations, the pay-as-you-go model might not be the best operational fit. It’s important to weigh whether the flexibility it offers customers is worth the potential revenue unpredictability for your business.
A reliable billing system is crucial for tracking usage accurately and handling variable charges. Look for tools that integrate well with your product and scale as you grow.
Decide whether you’ll charge per user, per feature, per transaction, or per resource unit. Test different models to find what resonates with your customers and sustains your margins.
Clearly explain how usage is measured, what they’ll be charged for, and how to track it in real time. Transparent communication builds trust and reduces billing disputes.
Track usage patterns, revenue impact, and customer feedback regularly. Use these insights to adjust pricing, thresholds, and support resources for better performance.
PAYG users may need extra hand-holding around billing and usage. Position your support team as a proactive partner, helping customers get the most value without surprises.
The pay-as-you-go pricing model offers SaaS businesses a flexible, customer-friendly way to monetize usage-based services — but like any pricing strategy, it isn’t a one-size-fits-all solution. The key lies in understanding your customers’ usage patterns, operational costs, and long-term revenue goals before deciding where PAYG fits into your pricing structure.
If you’re considering adding a pay-as-you-go option or managing multiple pricing models side by side, having a capable subscription management software is essential. Saaslogic Billing makes it easy to handle complex billing scenarios, from flat-rate and tiered pricing to usage-based and hybrid models — all from a single, scalable platform. With automated invoicing, real-time usage tracking, and flexible pricing configuration, it gives you the control and insights you need to build pricing models your customers love and your finance team can rely on.