Included Usage Billing and Overage Pricing Models

Overview

Chargebee's Entitlements-based Usage Billing (EBUB) allows you to charge customers based on their actual consumption of your product. Whether you offer a flat subscription with included usage, a pure pay-as-you-go model, or a hybrid combination, Chargebee Billing handles the tracking, entitlement management, and invoicing automatically.

All usage-based pricing models in Chargebee Billing fall into one of three categories:

This guide walks through each category and the most common billing and included usage grant frequency combinations, using Acme Inc., a SaaS automation platform as a running example throughout.

Before configuring any model, complete the four foundational steps in your Billing site:

1. Define your product catalog (plans and addons).
2. Ingest usage events into Chargebee Billing(via API, CSV bulk upload, or manual UI entry).
3. Define metered features that aggregate those events into billable units.
4. Link pricing for metered features by mapping them to plans and addons.

About Acme Inc.

Let's consider Acme Inc. that provides automation solutions for SaaS companies as a running example to understand our usecases better. Customers pay based on the number of automation tasks executed each month. Acme offers different plans (each granting different included usage) and uses Chargebee Billing to automate billing across a range of contract types and pricing models.

Throughout this guide, Acme's product catalog includes the following base items:

A single metered feature, Tasks (F1), is created with aggregation method = SUM of number_of_tasks, and linked to the relevant plans and addons in each model below.

1. Hybrid Pricing Model

In a hybrid model, a customer pays a fixed platform fee that grants a defined quota of included usage (entitlements). Any usage beyond that quota is billed as overages at a per-unit rate. Entitlement grants can be refreshed at different frequencies than the billing cycle, making this model highly flexible.

The four most common variations are:

Model 1 — Monthly / Monthly / Monthly

This is the most common hybrid model. The customer is billed monthly for their plan, receives a fresh quota of included usage every month, and any overages are invoiced the following month.

Acme's Use Case

John Doe subscribes to the Professional Monthly plan ($49/month, 100K tasks included). Overages beyond 100K tasks are billed at $0.10/task on the next month's invoice.

To setup this pricing model in Chargebee Billing follow the steps below:

Configuration in Chargebee Billing

Step 1: Product Catalog

Step 2: Ingest Usage Events

Acme sends usage events to Chargebee Billing each time an automation is executed. The key attributes required in each event are:

• id: UUID to uniquely identify the event.
• usage_timestamp: when the event occurred.
• subscription_id: the Chargebee subscription the event belongs to.
• automation_id: identifies which automation was executed.
• number_of_tasks: count of tasks completed in that run.

Events can be sent via the Usage Events API (individual or batch), bulk CSV upload, or manual entry in the UI.

Step 3: Define Metered Feature

Create a metered feature F1, Tasks with the following configuration:

• Aggregation method: SUM
• Attribute: number_of_tasks

Step 4: Link Pricing

Link F1 to plans and addons, and set included usage:

How Billing Works

Subscription is created for John Doe on the Professional Monthly plan on Jan 1:

1. Usage events accumulate throughout the month and Chargebee sums all number_of_tasks values for the subscription.
2. On the renewal date (e.g., Feb 1), a pending invoice is generated.
3. If total tasks ≤ 100K: only the $49 plan fee is invoiced.
4. If total tasks > 100K: overages are calculated at $0.10/task and added to the invoice via the Tasks Monthly addon.
5. Invoices include a usage summary breakdown.

Model 2 (PLG) — Annual / Annual / Monthly

This model suits longer-term contracts. The customer pays annually for their plan, receives their full included usage entitlement at the start of the annual term, and overages are billed monthly as they occur.

Acme's Use Case

John Doe signs an annual contract on the Professional Annual plan ($490/year, 100K tasks included for the year). If he exceeds 100K tasks in any month of that annual contract, overages are invoiced at the end of that month.

Configuration in Chargebee Billing

Step 1: Enable Multi-frequency Billing

Navigate to Settings > Configure Chargebee > Billing LogIQ > Billing & Invoices > Multi-Frequency Billing and enable Multi-frequency billing. This allows a single subscription to contain items with different billing frequencies.

Step 2: Product Catalog

Step 3: Define Metered Feature and Link Pricing

Similar to Model 1, create a metered feature F1, Tasks and Link pricing to both items:

How Billing Works

Subscription is created for John Doe on the Professional Monthly plan on Jan 1:

1. An annual invoice is raised on Jan 1 for $490 (covers Jan 1 – Dec 31). Entitlement of 100K tasks is granted for the year.
2. Throughout the year, tasks accumulate. Chargebee Billing tracks usage against the annual 100K included quota.
3. If John exceeds the included usage quota in November and uses 110K tasks by the end of November, the 10K overage ($1,000) appears on the Dec 1 monthly invoice.
4. A new annual invoice is rasied for renewal on the next Jan 1 for $490 for the next term. Fresh entitlements of 100K tasks are granted. Any December overages from the prior period are included on this invoice.

Model 2 (SLG) — Custom Entitlements via CPQ

Enterprise or sales-led customers often negotiate custom included usage beyond what a standard plan offers. Chargebee Billing supports two approaches to model this without creating new plan SKUs.

Option A: Edit included usage directly on the plan

Use Chargebee CPQ (Configure Price Quote) to create a quote for a new subscription, select the plan line item, and override the included usage for the metered feature with the negotiated quantity. If the quote is accepted, invoice the quote and create a new subscription. The change applies only to this customer's subscription.

Option B: Add a recurring top-up addon

Create a recurring addon (e.g., Extra Tasks addon) that grants additional included usage. In Chargebee CPQ, add this addon to the subscription and set the custom entitlement quantity for F1. This approach is preferable when you want the additional quota to appear as a visible line item on the invoice.

Model 3 — Annual / Monthly / Monthly

In this model, the customer pays annually (e.g., for a platform subscription), but included usage entitlements are refreshed every month. Overages are also billed monthly. This is achieved using a $0 dummy monthly plan addon that grants the monthly entitlement, alongside the annual plan and a metered addon.

Acme's Use Case

John Doe signs an annual platform contract ($1,188/year). The plan includes 100K tasks/month. If he exceeds 100K tasks in any given month, the excess is billed at $0.10/task the following month.

Subscription Structure

How Billing Works

Consider a subscription that starts on Jan 1.

1. An invoice is raised on Jan 1 for Annual platform fee of $1,188 (Platform plan, billing period Jan 1 – Dec 31) along with Monthly Task Grant dummy addon: $0 (not shown - billing period Jan 1 – Jan 31).
2. On Feb 1, entitlement for Feb is refreshed with fresh 100K tasks granted and an invoice is generated with the following:
   • On-demand Tasks Monthly metered addon = $0 (if 100K tasks not exceeded in Jan).
   • Tasks monthly dummy addon: $0 (not shown - billing period Feb 1 – Feb 28).
3. On Mar 1, if John consumed 110K tasks in Feb, an invoice is raised for On-demand Tasks Monthly metered addon = $1000 (10K × $0.10). $0 dummy addon not shown.
4. An invoice is generated on Jan 1(renewal) for $1,188 for the next term. Monthly metered addon for Dec overages (if any) also appears. $0 dummy addon for Jan is included but hidden.

Model 4 — Monthly / Annual / Monthly

In this model, the customer pays monthly for a platform addon, but the included usage entitlement is granted annually (e.g., a large annual quota distributed up-front). Overages are billed monthly. A $0 dummy annual plan holds the annual entitlement.

Acme's Use Case

John Doe subscribes to the Professional Monthly plan ($49/month). He negotiates 1.2 million tasks for the year up-front (annual entitlement). Any tasks beyond 1.2 M in the year gets billed at $0.10/task monthly.

Subscription Structure

How Billing Works

Consider a subscription that starts on Jan 1.

1. On Jan 1, invoice is rasied for Annual Task Grant dummy plan with $0 (not shown — billing period Jan 1 – Dec 31), full 1.2M task entitlement granted for the year, professional Monthly addon: $49 (billing period Jan 1 – Jan 31).
2. On Feb 1, invoice is rasied for Professional Monthly addon for $49 (billing period Feb 1 – Feb 28) along with Tasks Monthly metered addon = $0 (if cumulative tasks consumed in Jan did not exceed 1.2M annual quota). Cumulative usage tracked by Chargebee carries forward.
3. On Mar 1, if John consumed 110K tasks in Feb (cumulative now 210K / 1.2M), Tasks Monthly metered addon = $0. Annual quota is not yet exceeded, so no overage gets billed. Professional Monthly addon: $49.
4. On Aug 1 (overage scenario), if John's cumulative usage crosses 1.2M tasks by Jul end: Tasks Monthly metered addon = $10000 (100K excess tasks × $0.10). Professional Monthly addon: $49. Annual Task Grant dummy plan: $0 (not shown).
5. On Jan 1 (renewal) Annual Task Grant dummy plan: $0 (not shown, fresh 1.2M task entitlement granted for the new year). Professional Monthly addon: $49 (billing period Jan 1 – Jan 31). Tasks Monthly metered addon for Dec overages (if any) also appears.

2. Purely Prepaid Pricing(Included Usage Only) Model

In the purely prepaid model, customers receive an included usage quota and cannot go beyond it, there is no overage addon in the subscription. When usage reaches the limit, access is restricted or a notification is triggered, depending on your configurations.

Acme's Use Case

John Doe subscribes to the Professional Monthly plan (100K tasks/month). Once his 100K tasks are consumed, Acme's service blocks further automation runs until the next billing period.

Subscription Structure

There is no metered overage addon in the subscription. The metered feature F1, Tasks is linked only to the plan, with included usage = 100K tasks/month.

Configuration Notes

• Follow Steps 1–4 from Model 1, but do not add the On-demand Tasks Monthly metered addon to the subscription.
• Chargebee Billing will track usage against the 100K entitlement and surface usage data on the subscription page in real time.
• Your application is responsible for enforcing the hard stop. Query the Usage Summary API to check current consumption before allowing task execution.

Thresholds and Alerts

You can use Chargebee's usage alerts to notify customers (or your internal users) when consumption reaches key milestones like 80% and 100% of the included quota. This allows you to:

• Proactively prompt customers to upgrade their plan before hitting the limit.
• Trigger automated actions (e.g., suspend service, send an upsell email) via webhooks.

3. Pay-As-You-Go (PAYG) Pricing Model

In a pure PAYG model, there is no included usage. Every task consumed is billed at a per-unit rate. This model suits developer tools, PLG products, or any offering where customers want to pay only for what they use with no upfront commitment.

Acme's Use Case

Acme offers a free-to-start tier where customers are billed $0.05 per task with no monthly minimum. John Doe signs up without a plan commitment and is invoiced monthly for total tasks executed.

Subscription Structure

There is no plan with included usage. The metered feature F1, Tasks is linked only to the metered addon with entitlement set to Unlimited. Chargebee Billing rates all recorded usage against this addon.

Configuration in Chargebee Billing

1. Create the metered addon On-demand Tasks Monthly with per-unit pricing ($0.05/task). Mark it as a metered item.
2. Create metered feature F1, Tasks (SUM of number_of_tasks).
3. Link F1 to On-demand Tasks Monthly with entitlement = Unlimited. This means every unit is billable, and there is no included usage.
4. Create a subscription with only On-demand Tasks Monthly as a line item (use a $0 free plan as a container).

How Billing Works

1. Usage events are ingested throughout the month as Acme's customers execute automations.
2. On the billing date (e.g., Feb 1), Chargebee Billing calculates total tasks for January.
3. Invoice: On-demand Tasks Monthly = Total tasks × $0.05. If John ran 50,000 tasks in January, his invoice will be for $2,500.
4. If zero tasks were executed, no charge is generated for the metered addon.

Important Points to Consider

• The items granting included usage will all be of the same frequency.

  • This is allowed:

    • Plan - Metered Feature (Tasks) - Annual
    • Addon 1 - Metered Feature (Tasks) - Annual
    • Metered addon - Metered Feature (Tasks) - Monthly

  • This is not allowed:

    • Plan - Metered Feature (Tasks) - Annual
    • Addon 1 - Metered Feature (Tasks) - Quarterly
    • Metered addon - Metered Feature (Tasks) - Monthly

• The allowed billing frequencies of plans and addons are defined as per Multi frequency billing.

• Included usage can only be granted using recurring addons and not one-time charges.

• Only on-demand addons with per unit pricing model are supported in the included usages and overages model in Multi frequency billing.

Related Resources

For detailed step-by-step configuration, refer to the following Chargebee documentation:

• Setting up Advanced Usage-Based Billing
• Ingesting Usage Events into Chargebee
• Defining Metered Features
• Link Pricing for Metered Features
• Multi-frequency Billing