Invoice based upon consumption of cloud services

Usage-Based Billing Software

Usage-Billing-Software-2

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.

Multi-dimensional rating engine

Ordway’s rating engine supports all the popular discounting models as well as hybrid combinations of usage-based pricing with tiered subscriptions and percentage (commission) pricing models.

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.

Contract structures

Convert month-to-month customers into long-term contracts

Ordway supports month-to-month as well as long-term contract structures with more predictable revenue streams:

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 with drawdowns and replenishment

Convert pay-as-you-go customers into long-term contracts with recurring revenue by offering prepaid usage options.

Drawdowns: Track revolving balance of vendor-issued and customer prepaid credits. Debit based upon actual consumption month-to-month.
Replenishment: Create workflows to auto-replenish pre-paid credits based upon triggers or thresholds. Alternatively, notify customers for approvals.
Usage pooling: Allow customers to apply credits to usage across their multiple business units and your various product offerings.
infographic of business man signing a contract with oversized pencil
Ordway screen shot of annual spend commitment tracking

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.

Ordway screen shot of usage per month diagram

Online Guide to Usage-Based Pricing

The industry’s most comprehensive guide to usage-based pricing. In it you’ll find detailed information regarding volume discounts, prepaid usage, monthly minimums, rating engines, ARR reporting and more.

View the guide »

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.
infographic of man with magnifying glass inspecting invoice line items

Frequently Asked Questions

What types of usage-based pricing models does Ordway support?

We support a wide variety of billing metrics and units of measure including time-based (e.g. $ per hour of use), transaction-based (e.g. $ per API call), volume-based (e.g. $ per GB of data), and count-based ($ per connected device).  Ordway’s product catalog offers native support for single-rate, volume, and tiered discounting models.  You can sign up customers for pay-as-you-go monthly plans or longer-term, annual contracts with prepaid usage, monthly minimums, or spend commitments.   Ordway also offers a number of ways to calculate the “billable usage quantity.”  We can simply count units consumed or use methodologies such as high water mark or percentile billing.

What is usage-based billing software?

Usage-based billing software generates invoices for based upon the quantity of your product a customer actually consumes. Charges are typically computed by multiplying the quantity of units (q) consumed by the per unit price (p).  For example, suppose customer may pay $1.00 per hour for access to a cloud computing platform.  To determine, the monthly charges the usage-based billing software would calculate the number of hours that the service was consumed (e.g. 100 hrs) during the billing period and multiply it by the per unit price (e.g. $1/hr) to arrive at the line item charge (e.g. $100).
Learn more in our online guide >>

How does usage-based billing software work?

Customer’s consumption is metered in your software in real-time.  At the end of the month (or more frequently), you can upload the metered consumption data to Ordway.  The consumption data is fed into our rating engine, which will compute the charges in two steps.  First, we determine the “billable usage quantity” accounting for free/included units, prepaid, minimums, and others.  Second, we determine what the appropriate per unit price to charge is based upon the contract terms, discount schedule, and pricing.  The quantity and the price are multiplied (p x q) to arrive at the line item charge for the period.  
Usage charge line items are then inserted into the customer’s invoice along with the current outstanding balance, sales taxes, and any other fixed or variable charges.  We distribute the invoice electronically to the customer, who can pay the bill via credit card or bank transfer (ACH, wire, check).
Learn more in our online guide >>

How can I get the metered consumption data into Ordway’s usage-based billing software?

Ordway offers three ways to import metered consumption data into our billing system.  First, you can enter individual usage records in via our user interface (recommended only for small volumes).  Second, you can upload a CSV file with usage via our bulk import utility.  Third, you can post the metered consumption data with our API.  
With the API, you can stream metered data in real-time or batch upload at a regular frequency (once per day, week, or month).  The APIs allow you to post individual usage records or upload in bulk.  We also have APIs for updating, deleting, listing, and retrieving usage records. 
View our API documentation >>

Can Ordway perform revenue recognition for usage-based pricing models?

Yes, Ordway can automate much of the five-step process to recognize revenue under the ASC 606 (US GAAP) and IFRS 15 (international) standards.  Most customers elect to recognize revenue based upon the actual invoiced amounts each month.  Journal entries are created and posted to Ordway’s revenue sub ledger.  At period end (or on a continuous basis) Ordway can publish summary journal entries to your general ledger.  We integrate with many of the popular accounting and ERP applications including Quickbooks, Xero, Sage Intacct, and Oracle Netsuite.
Learn more >>

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