What Is Consumption-based or Usage Billing?

What Is Consumption-based or Usage-based Billing?

What is consumption-based billing?

Over the past few years, companies have started shifting from one-off sales to subscription-based models (i.e., movie streaming, food delivery, beauty products). These companies offer a recurring, flat fee for their product or services.

However, these models might not work if customers want to pay only for what they use (pay-as-you-go). For this reason, usage-based billing, is becoming more important. Especially with communications services where cloud-based products are becoming the norm.

Usage Based Pricing Models

A consumption-based pricing model is a service and payment arrangement in which your customer pays according to the resources they use or consume. For example, your customers would be charged for all the calls they made or data they downloaded using their phones.

What Is Usage in Telecom?

Telecom usage can include phone calls, data, text messages, or faxes a customer uses over a particular determined period.

Rating and Charging for Usage

Usage-based billing tracks how much each customer “uses” your products or services to create a dynamic invoice for each customer. The usage rating process involves converting a customer's usage data into a monetary-equivalent value.

Usage Billing System

The billing system gathers service usage, rating, applying taxes, and then generating the customer invoice. The billing process also includes transmitting the invoices and recording customer payments and adjustments (refer to our billing process flow chart).

More About TimelyBill

Our software helps you with usage rating, charging, and the entire billing process.  Learn how we help you monetize your services, your network, and your subscribers. Sign up for a personalized demo.

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