Usage-based pricing (UBP) is increasingly becoming the standard for SaaS and AI monetization, with over 60% of companies adopting it due to its alignment with AI's variable costs and customer preferences. This pricing model, which charges based on consumption, presents technical challenges for developers, such as metering, billing logic, and automation. UBP is effective when usage aligns with customer value and vendor costs, as seen in cloud infrastructure and API-driven software. The complexity of implementing UBP lies in designing a scalable billing system that handles various pricing models, such as pay-per-use, credit-based, percentage-based, outcome-based, and hybrid models, each with its own benefits and challenges. Building a custom billing system is resource-intensive, requiring attention to metering, pricing logic, invoice generation, and payment integration, while maintaining scalability and accuracy. Lago, an open-source API-first billing platform, was developed to address these complexities, allowing companies to focus on their core products by providing a flexible, pre-built billing solution that supports diverse pricing strategies and ensures seamless revenue flow.