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Usage-based pricing allows customers to pay only for what they consume. This model has grown significantly in recent years and continues to expand. A well-known example is Stripe, which charges per successful card transaction—allowing smaller companies to start with low costs and scale their spending with actual usage. When usage-based pricing is enabled, upgrade and downgrade behaviors are inherently immediate:
  • Any pricing update takes effect right away.
  • All usage reported after the change is billed using the updated price.

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Unit increases in subscriptions with true-up pricing

When true-up pricing is enabled, changes to unit quantities are aggregated and billed at the end of the billing cycle.
This model is common when unit counts fluctuate frequently—for example, adding or removing users from a workspace, similar to the billing behavior of Loom. The behavior follows standard upgrade and downgrade logic, except when unit quantities increase:
Behavior in subscriptions with a monthly billing cycleBehavior in subscriptions with an annual billing cycle
The customer is charged the prorated amount for the additional unit at the end of the billing cycle.The customer is immediately charged the prorated amount for the additional unit.