Discover the top challenges of usage-based pricing, from overage fees to zero-dollar invoices, and learn how to reduce customer inquiries.
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Automate the usage-based billing lifecycle
From consumption to collection.
Data mediation
Stream, batch, or upload metered consumption data. Share pre-rated, partially rated, or unrated files. Process aggregate blocks or discrete units.
Rating engine
Compute charges for flat-rate, volume, tiered, and stair step billing models. Combine with flat-rate subscriptions, percentage billing, and one-time charges.
Overages & allowances
Calculate overage charges for excess usage above subscription allowances. Automate rollovers of credits and track expiration dates.
Pre-paid usage
Manage drawdowns and replenishment of prepaid credits. Track progress towards contract spend commitments and calculate true-ups.
Detailed invoices
Display formulas, calculations, and rating tables for usage calculations on invoices. Enable downloads of usage detail records.
Rating engine
Ordway’s usage-based billing platform supports all the popular discounting models as well as hybrid combinations of usage, subscription, and transaction pricing.
Single rate
Apply flat rates to usage for linear pricing models
Example: The customer is billed $0.50 per transaction whether they performed 1 transaction or 1 million transactions.
Volume
Apply dynamic volume discounts based upon usage.
Example: The customer is billed if $1/unit if volume is below 1000. Above 1000, all units from 1 to n are billed at a discounted rate ($0.50).
Tiered
Compute charges at multiple rates for multiple tiers.
Example: The customer is billed $1 for the first 1000 units consumed, $0.50 for the next 1000 units, and $0.25 for any additional units.
Stair step
Tiered packages – each with a max allowance.
Example: Package A includes 500 units for $100/month. Customers of package A are billed $100/month whether they use 0, 250, or 500 units.
Get a Demo
See Ordway’s usage-based billing software in action. Schedule a 30-minute Ordway demo with one of our sales engineers.
Capacity Contracts
Convert monthly, pay-as-you-go to annual contracts
With Ordway’s usage-based billing, you can offer customers discounts for signing annual capacity contracts with monthly minimums or prepaid credits.
Acquire
Attract new customers with low risk and low cost entry point models that allow them to realize the value of your offering.
- Freemium and free trials: Offer 30, 60, or 90 day free trials that auto-convert into paid plans. Or limited feature, free forever plans with usage caps.
- Pay-as-you-go: No commitment plan in which the customer pays only for what they consume each month with the option to cancel at any time.
Commit
Convert month-to-month customers into long-term contracts with predictable revenue models that are more like recurring.
- Prepaid usage: Pay in advance for a fixed number of units or dollar value of services. Automated or sales assisted replenishment as needed.
- Subscription: Packaged offering that allows usage within a certain volume range or up to a certain maximum in exchange for a monthly fee.
Expand
Grow customer revenues with enterprise contracts that allow multiple teams to use multiple products across the account.
- Monthly minimums: Spend either 1) actual fee based upon usage or 2) a minimum dollar amount per month in exchange for a discount.
- Spend commitments: Achieve a certain spend threshold per year in exchange for discount. True up payment is owed if commit not realized.
Prepaid credits
Monthly drawdowns and replenishment
With Ordway’s usage-based billing you can track:
Spend commitments
Offer volume discounts to customers in exchange for spend commitments to incentivize greater adoption of usage-based products:
Cumulative spend
Track the aggregate spend (and usage) on eligible products on a quarterly, annual or contract term basis.
Remaining obligations
Calculate remaining balance based upon contract obligations and historical billings across various products and departments.
True up calculations
Determine amounts owed by customers for spend deficits. Perform true up calculations on monthly, quarterly, or annual basis.
Usage allowances, rollovers, and overages
Offer customers with lower consumption the flexibility to rollover credits to future periods. Monetize excess usage with overage charges.
Allowances
Support pricing models with allowances for a certain number of units or transactions per month as part of a fixed fee package.
Rollovers
Manage rollover units along with the any associated usage caps, policies, and expiration dates.
Overages
Calculate charges for overages based upon pre-negotiated discounts, standard price lists, or by applying premium surcharges.
Invoice presentment for usage-based billing
Reduce customer billing inquiries and disputes with more details on rating, calculations, and consumption
- Billing calculations:
Display the actual formulas, calculations, rating tables, and inputs used to arrive at usage-based charges and overage fees.
- Balance transparency:
Display rollover units, pre-paid credit balances, expiration dates, and remaining spend obligations on monthly invoices.
- Usage detail records:
Enable downloads of detailed transaction records from a customer billing portal or attach files to monthly email invoices.
Usage-Based Billing Software FAQs
What types of usage-based pricing models does Ordway support?
Ordway supports a wide variety of billing metrics and units of measure, including time-based, transaction-based, volume-based, and count-based models, with native support for single-rate, volume, and tiered discounting. It accommodates pay-as-you-go, monthly plans, or longer-term annual contracts with prepaid usage, monthly minimums, or spend commitments, and can calculate billable usage quantities using methods like high water mark or percentile billing.
What is usage-based billing software?
Usage-based billing software generates invoices for customers based on the actual quantity of a product or service they consume. Charges are typically computed by multiplying the quantity of units consumed by a per-unit price, as exemplified by a cloud computing platform billing $1.00 per hour for 100 hours of service.
How does a usage-based billing platform work?
A usage-based billing platform works by metering customer consumption in real-time, then processing this data through a rating engine to compute charges based on billable quantity and appropriate per-unit price. The platform first determines the ‘billable usage quantity,’ factoring in free units, prepaid amounts, and minimums, and then applies the correct per-unit price according to contract terms and discounts to arrive at the line item charge, which is then incorporated into a detailed invoice for electronic distribution and payment.
How can I get the metered consumption data into Ordway’s billing software?
Metered consumption data can be imported into Ordway’s billing system through its user interface for small volumes, via a bulk CSV file upload utility, or by posting the data using its API. The API allows for streaming real-time data or batch uploading at regular frequencies, supporting individual usage records or bulk uploads, and also provides functionalities for updating, deleting, listing, and retrieving records.
Can Ordway perform revenue recognition for usage-based pricing models?
Yes, Ordway can automate much of the five-step process required for revenue recognition under ASC 606 (US GAAP) and IFRS 15 (international) standards. Most customers choose to recognize revenue based on actual invoiced amounts monthly, with journal entries created and posted to Ordway’s revenue sub-ledger, which can then publish summary journal entries to general ledgers like Quickbooks, Xero, Sage Intacct, and Oracle Netsuite.
See the industry’s most powerful usage-based billing software in action.
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