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Usage-based pricing

Overview

Usage billing allows merchants to bill their customers based on how much of the product or service they consume after it was used. Usage can be billed standalone (without recurring charges), on top of recurring charges, or on top of usage already included in the plan (in which case it is known as overage). 2Checkout charges subscribers for usage at the start of a new billing cycle for metered resources consumed during the previous billing cycle. Usage billing is also referred to as metered billing, pay-per-use, and pay-as-you-go.

How usage billing works

For example, a business that operates a newsletter service for which they charge their clients a monthly recurring fee of $9.99 and an additional 

  • $0.1 per message if the customer sends 1 to 1,000 messages  
  • $0.09 per message if the customer sends 1,001 to 10,000 messages and  
  • $0.075 per message if the customer sends more than 10,000 messages.  

Assuming that in January 2020 Customer A uses the service to send out 800 messages, while Customer B sends out 5,000 messages the same month, this is how much each customer will be charged when their subscription needs to be renewed for February: 

Customer Subscription price - Feb 2020 billing cycle Usage (messages) - Jan 2020 Usage cost - Jan 2020 Total billed

Customer A 

$9.99 

800 

800 *$0.1 = $80 

$9.99 + $80 = $89.99 

Customer B 

5,000 

5,000 * $0.09 = $450 

$9.99 + $450 = $459.99 

Despite using the same service, customers will be billed different amounts, depending on how much of the service they used.  

Availability

Usage Billing is included in our 2Subscribe and 2Monetize packages, but it is also part of the 2Bill add-on available for the 2Sell accounts. Contact 2Checkout directly if you wish to employ usage billing capabilities. 

Set up usage-based pricing options 

Add usage-based pricing options to existing subscription plans 

To add usage-based pricing options to existing subscription plans follow these steps: 

1. Log into your 2Checkout Merchant Control Panel.

2. Go to Setup → Products and scroll down to select the desired subscription plan (product).

3. After selecting the product/plan, click the Edit button.

4. In the next window, go to the Pricing tab of the product set-up and then to the Pricing configuration where you want the usage-based pricing option to be added.  

Usage-based pricing options are currently only available for Pricing Configurations with base price. 

By adding Usage-based pricing options to only certain Pricing Configurations you have the ability to customize pricing for different regions/countries.  

5. If the usage-based pricing option does not exist, then click on Create new pricing options group button to add it.  

  • In the iframe window, select Scale as Option type and Pay per usage as Scale type.
  • Fill in the name and description of the new pricing option group, and optionally translate them into the languages you want. 
  • Fill in the unique code for the pricing option. This unique code will be used when uploading usage for your subscriptions. 
  • Add as many scale intervals and fill in the price per unit for the respective scale interval. 
  • Click Save to add the pricing option to the Available pricing options groups list.
Unit Prices are not automatically converted from one currency to the other. You need to specify what the price is in the currencies you will be billing this product option. Leaving a price of zero for a currency translates into usage not being billed in that currency.

6. Locate the newly added price option or the existing price option that you want to attach to your product in the Available pricing options groups list and click on Add now.

7. To save the Pricing Option Group to the list of “Active pricing option groups” on your product, click on Save.  

2Checkout does not currently support more than one usage-based pricing options group for the same product. 

Keep in mind that a Pricing Option Group added to a product will only be reflected on subscriptions created after the price option group was added. 

Edit usage pricing options  

You can edit the options on your Usage Pricing option group and have these edits impact all products that use that price option by clicking on Edit options for that pricing option group. 

You can also edit the options on your Usage Pricing option group and have these edits impact only a specific product.

  • Go to the Active pricing options groups list for that product.
  • Click on the Pricing options group name and check the Use with different impact on price option before editing and saving the details.

Deactivate usage pricing options groups  

You can deactivate usage pricing option groups by clicking “Deactivate” for the specific Price Option Group in the “Active pricing options groups” list for that product.  

Usage pricing option groups can be deactivated only when all subscriptions with that price option group are canceled or expired.  

Read here more info on how to manage and upload usage billing.

FAQ

1. What happens when subscriptions with a usage cost component are canceled? 

The 2Checkout system does not attempt to renew or charge customers for canceled subscriptions, nor will it send out any notifications. Instead, consider disabling the automatic billing process to enable 2Checkout to collect outstanding usage payments. 

2. Can subscriptions with a usage cost component be sold to partners via Channel Manager? 

This functionality is not supported at this point in time. 

3. Do affiliates get a commission from the entire value of the entire order (including usage value)? 

Yes, but only if you're offering your affiliates commissions for renewal subscriptions. 

 

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