Glossary · Monetization models
Usage-Based Billing
Charging in proportion to consumption, such as per token or request.
What is Usage-Based Billing?
Usage-based (or consumption) billing charges users according to how much they use — per token, request, or action — aligning price with the cost of serving them.
It fits metered API products but cannot monetize a free consumer chat experience where the user is not paying at all.
Usage-Based Billing in context
To understand Usage-Based Billing fully, it helps to know the concepts around it. Subscription, a recurring fee charged for ongoing access to an app. Inference Cost, the compute cost of running an LLM to produce a response. ARPU, average revenue per user over a period.
Together these describe how monetization models works in practice for an AI app, and where Usage-Based Billing fits among them.
Frequently asked questions
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