Consumption billing also known as usage based billing or pay-as-you-go billing — is a pricing and monetization model in which customers are charged based on the actual quantity of a product or service they consume.

Instead of paying a flat subscription rate regardless of use, customers pay in proportion to what they use, such as: the number of API calls made, the amount of data processed, the number of units consumed, the number of messages sent, or any other measurable metric tied to value delivery.

Modern businesses — especially in SaaS, telecommunications, utilities, medical equipment usage, and cloud infrastructure — are increasingly adopting consumption based billing.

Price calculation in the consumption based billing is derived from Usage Metric - the measurable unit tracked for billing — e.g., API calls, GB of storage, transactions, active users and Tiered Pricing - rate structures where the unit price changes as consumption crosses defined thresholds.

In Conga Billing, when a product's Price Type is set to Usage, the product is classified as a usage based product and is eligible for usage based billing. Upon activation of an order that includes a usage based product, Conga Billing automatically creates a Billing Schedule Record with a zero fee.

Actual consumption is recorded through Usage Inputs, which capture the volume or quantity consumed over a defined period. When rated, Conga Billing calculates the corresponding usage fee amount and updates the corresponding billing schedule record.