Usage Based Charges
Pricing based on usage allows you to align your costs closely with actual consumption, ensuring fairness and transparency. In this section, we will explore the concept of metered components, which serve as the foundation for usage-based price plans in Octane.
Metered components are the essential elements that make up your usage-based price plans in Octane. Each metered component comprises two key components:
- Meter: This identifies the specific meter that you want to measure for billing purposes. It can represent various aspects of usage, such as data transfer volume, API requests, or any other quantifiable metric relevant to your service. You can only choose from one of the meters that you have created.
- Consumption-Based Price: This corresponds to the rate applied to the meter. It defines the cost associated with each unit of consumption, ensuring that you accurately reflect the value of your services.
Octane offers a range of usage-based pricing models to cater to your business's unique requirements. These models allow you to apply rates to your meters in different ways:
In the flat-rate pricing model, the same rate is applied to the entire meter, regardless of the quantity consumed. This straightforward approach provides predictability and simplicity in pricing.
The price per unit depends on the total quantity aggregated in the billing cycle. You can think of this as your standard taxation model (with different tax brackets). See the example below:
Stairstep pricing introduces a straightforward billing approach where flat prices are assigned to specific usage ranges, eliminating the complexities of per-unit pricing. With this model, predefined tiers simplify the process, and users pay a consistent price regardless of the quantity within that tier. For instance, if your business offers three pricing levels, the first level might charge $100 for 1 to 50 units, making it cost-effective even if customers purchase the maximum of 50 units for the same $100. The second level, priced at $180, covers 51 to 100 units, offering predictable costs regardless of the quantity. The final tier, typically at a higher value, may include purchase caps, depending on the product or service, to accommodate more extensive usage scenarios.
Batched pricing offers an alternative approach to billing, allowing you to charge based on batches of units rather than individual units. In this model, units are rounded up to the provided batch size for pricing. For instance, rather than charging $1 per API request, you can opt for $1 per 10 API requests. In this scenario, if a customer's total usage amounts to 105 API requests, they will be billed a total of $110. Batched pricing can be used in-conjunction with any of the pricing models described above.
Octane supports unit conversion out-of-the-box. This enables you to adapt your pricing to different units of measurement for the chosen meter. For instance, if your meter is defined in bytes (i.e. you are sending measurements to Octane that represent bytes), you can still price on kilobytes, megabytes or gigabytes. Octane automatically handles the conversion of units and calculates the correct amount.
In addition the above pricing models, Octane also supports a more complicated form of pricing on metadata called "Price Lists".