Which statement defines usage-based billing?

Which statement defines usage-based billing?

• A. Fixed monthly fee regardless of usage
• B. Businesses charge based on how much of the product is used during the billing cycle
• C. Businesses bill only at renewal
• D. Businesses bill upfront for unlimited use

Answer: (B)

Usage-based billing charges customers according to how much of the product they actually use during the billing period. This means the amount they pay scales with their consumption—for example, API calls, minutes used, or data transferred. The statement that describes charging based on usage during the billing cycle best captures this idea. The other patterns don’t fit: a fixed monthly fee bills the same amount regardless of use; billing only at renewal implies charges that aren’t tied to ongoing consumption; and charging upfront for unlimited use has no link to how much is actually used. In practice (and in Stripe), you implement this with metered pricing by recording usage during the cycle and invoicing based on that usage.

Usage-based billing charges customers according to how much of the product they actually use during the billing period. This means the amount they pay scales with their consumption—for example, API calls, minutes used, or data transferred. The statement that describes charging based on usage during the billing cycle best captures this idea. The other patterns don’t fit: a fixed monthly fee bills the same amount regardless of use; billing only at renewal implies charges that aren’t tied to ongoing consumption; and charging upfront for unlimited use has no link to how much is actually used. In practice (and in Stripe), you implement this with metered pricing by recording usage during the cycle and invoicing based on that usage.