Consumption-based pricing, a model where companies charge customers based on actual usage rather than a fixed subscription, is increasingly adopted in sectors like AI, B2B infrastructure, and API-based services due to its alignment of costs with customer value and usage. This pricing strategy is gaining traction, with 64% of SaaS companies implementing it, especially as AI's high costs make traditional subscription models less viable. It offers advantages such as transparent pricing, improved customer retention, and data-driven insights, but presents challenges like revenue predictability and billing complexity. Successful examples include AWS and hybrid models like Supabase, which combine subscription allowances with usage-based charges. Effective implementation requires defining metrics, accurate metering, and compliant invoicing, often supported by platforms like Lago, which offer real-time metering, global invoicing, and automated compliance. This approach is particularly beneficial for companies that can break down usage into measurable units and whose product value is directly tied to customer consumption, with API-driven platforms making the model accessible even to smaller teams.