// GTM
Usage-Based Pricing
Also known as UBP · Consumption Pricing
Pricing that scales with a consumption metric (API calls, events, tokens, GB) rather than seats.
In depth
Popularised by Twilio, Snowflake, Datadog. Aligns cost to value, expands automatically with customer growth, and is what makes agentic AI pricing possible. Requires strong metering infrastructure and creates forecasting complexity (consumption is lumpier than seats).
Related terms
Seat-Based Pricing
Pricing per named user or active seat. The default SaaS pricing model since 1999.
Hybrid Pricing
A pricing model combining a seat-based platform fee with usage-based charges for consumption components.
Expansion ARR
Incremental ARR from existing customers via upsell, cross-sell, seat expansion or usage growth.