Understanding Usages

Introduction

Usage data is critical to your business as it provides clear insights into how customers consume and interact with your products or services. Usage refers to any measurable aspect of a customer's consumption of your product or service.

For example, usage could be:

• Number of users accessing a SaaS platform.
• Number tokens processed by the LLM(Large Language Model).

Chargebee Billing allows you to track usage data for your products and services accurately. As the single source of truth for your raw usage data, Chargebee empowers you to track usage based patterns, make important decisions about product packaging, pricing, and manage usage based billing.

Most businesses understand which features of their product or service they want to monetize. However, the full potential often remains untapped without analyzing customer usage patterns. Chargebee unlocks this potential with usage data. If you already know what you want to monetize, Chargebee enables you to move forward with confidence. Additionally, Chargebee's usage events data provides valuable insights, allowing you to identify the features or services that are best suited for monetization.

Usage Tracking Terminology

Following are some key terms around usage tracking and billing that you can familiarize yourselves with:

Usage Events: "Usage Events" are specific actions triggering usage measurements. For Artificial Intelligence tools, events could include input tokens and output tokens. In cloud storage, events could include data uploads, downloads, storage duration, API calls, and data transfers.

The associated usage event data for these actions are sent Chargebee Billing to be tracked. Let's look at some examples:

The usage event data for a Data Upload event includes properties like storage, file type, region, and so on.

{ 
  "event_type": "file_upload", 
  "timestamp": "2025-01-15T12:34:56Z", 
  "customer_id": "12345", 
  "file_size_gb": 0.5, 
  "file_type": "image/jpeg", 
  "region": "us-east-1" 
}

Similarly for API call event, the usage event data includes properties like api method, size of request, and so on.

{ 
  "event_type": "api_request", 
  "timestamp": "2025-01-15T14:15:32Z", 
  "customer_id": "12345", 
  "api_method": "get_file_metadata", 
  "request_size_kb": 1.4, 
  "response_size_kb": 10.5 
}

Note that Usage Events are NOT the same as Chargebee Billing Events.

Ingestion: This refers to the process of bringing usage events data into Chargebee Billing that triggers usage measurements for billing and data analytics. For example, each data upload into a cloud storage or processing service or each photo edited by an AI tool can be considered a usage event. Bringing this usage event data into Chargebee Billing for usage computation refers to ingestion. The data ingestion for Chargebee Billing can be done via Usages API, bulk import via UI, or manual data addition via UI.

Metered Features: Metered features are specific capabilities or aspects of your product or service that can be tracked based on customer usage along with predefined entitlements. After configuring filtering and aggregation rules, metered features can be associated with:

• Usage based items: When associated with usage based items, all the usage is referred to as on-demand usage and customers get charged accordingly.
• Non-usage based items: When associated with non-usage based items, entitlement limits can be defined which is referred to as included usage in the item purchased.

Metered feature creation is a pre-requisite for aggregation. Aggregation happens based on the mathematical operation defined in the metered feature. Some examples of metered features are API Calls(charging customers based on the number of API requests they make), Data Usage(billing based on the amount of data consumed in GB), No. of users(billing based on the number of users who have signed up).

Aggregation: This refers to the process of combining and summarizing usage data over a specific period or across multiple instances. It involves gathering individual usage measurements from various sources or data ingestions and consolidating them into a cohesive view for billing and analytics purposes. For example, it could be sum of input/output tokens in an AI bot, count of images edited by an AI tool or sum of number of characters translated by an AI tool. It helps you generate accurate invoices by presenting a comprehensive overview of the resources consumed by subscription during a specified time period.

Usage Based Billing: While standard billing typically involves a fixed monthly fee or a predetermined pricing tier, Usage Based Billing(UBB) is a pricing model where customers are billed based on their actual usage of your product or service. In Chargebee Billing you can track usage and bill your customers for the following two types of pricing models:

• Entitlement pricing model (Included usage)
• Pay-As-You-Go pricing model (On-demand usage)
• Hybrid pricing model (Included usage + On-demand usage)

Following image illustrates an example of PAYG pricing model and how the invoice amount is calculated based on customer usage:

• Unit Price: Price for each unit of service consumed.
• Usage Tracking: Usage is tracked, usually in real-time, based on metrics like data volume or processing time.
• Billing Calculation: The customer's total bill is calculated by multiplying their usage by the unit price.
• Billing Period: Customers are invoiced periodically, typically monthly, for their actual usage during that period.

Usage Analytics: Chargebee tracks usage data accurately, aligning it with your business logic and operational needs. It helps you generate meaningful usage based insights, empowering you to understand customer behavior, usage trends, and billing dynamics effortlessly. With usage metrics, you can:

• Track how/how much of your product features are being used by different customer cohorts.
• Create personalized pricing plans, improve resource allocation, and develop targeted upsell or cross-sell strategies.
• Understand peak demand or dull periods, and uncover opportunities to optimize your services as required.
• Minimize billing disputes or revenue leakage with scale when your business grows and customer needs evolve.

Key features

The following image demonstrates the key capabilities of usage tracking and billing feature in Chargebee Billing.

Usage Based Billing Thresholds

The following usage based billing thresholds apply to your Chargebee Billing site:

Live Site

• Number of metered features: 50
• Usage events volume: Up to 100M usage events per month
  • Usage event size limit: 1 KB
  • Throughput limit: Up to 1,000 usage events per second (burst rate)

These thresholds are higher on the Live site compared to the Test site. If your business requires higher limits, please contact us. We can support significantly larger volumes and can discuss pricing based on your needs.

Enable advanced usage based billing

Test site

To enable this feature in your test site, follow these steps:

1. Log in to your Chargebee Billing account.
2. Navigate to Settings > Configure Chargebee > Billing LogIQ > Metered Billing and Advanced Usage Based Billing.
3. Enable Advanced Usage Based Billing.
4. Once enabled you can see Usages in your left nav.

Live site

To enable this feature in your live site, submit an access request.

Related Articles

• Usage based billing usecases
• Setting up usage based billing