Usage-based pricing models: 2026 guide for Malaysian SaaS

Key Takeaways:

• Tiered and volume pricing look similar but produce very different bills at the same usage level. The difference becomes more significant as usage scales.

• Pure volume pricing creates a pricing cliff: a customer just below a threshold pays a higher effective rate than one just above it, which can push customers to game their usage.

• Airwallex's usage-based billing supports tiered, volume, and hybrid pricing structures, so you can configure the right model without building your own billing infrastructure.

Usage-based pricing models give Malaysian SaaS businesses a way to charge customers based on how much they actually use, rather than relying on a fixed monthly subscription.

But choosing between tiered, volume, or hybrid pricing can have a big impact on both your customers’ bills and your revenue as usage grows.

This guide explains how the main usage-based pricing models work, how they differ, and what to consider when choosing one for your SaaS business.

If you're still deciding whether usage-based pricing is right for your business, read our guide to usage-based billing.

4 main usage-based pricing models

There are four main structures for charging by usage. Most SaaS businesses start with one and evolve toward a hybrid as their customer base grows.

Here’s a quick overview:

For a deeper look at the metering infrastructure that sits behind all four models, see our guide to metered billing.

Option 1: Per-unit / pay-as-you-go pricing

Per-unit pricing (also called pay-as-you-go, or PAYG), is the simplest usage-based model.

You set one fixed rate per unit, and customers pay that rate for every unit they consume. There are no thresholds, no tiers, and no minimum commitments.

This is the baseline from which volume and tiered pricing both depart. It suits early-stage products where usage patterns are still unknown, or infrastructure-style services where demand varies so widely that a tiered structure would be difficult to design.

The trade-off is a revenue floor problem: if a customer uses nothing, you earn nothing.

Option 2: Volume pricing

Volume pricing takes the PAYG model one step further.

Instead of one fixed rate for all units, it defines multiple rate bands; but once a customer's total usage crosses a threshold, the new rate applies to every unit they've consumed, not just the ones above it.

How to calculate a bill with volume pricing

Take this example structure for an API-based service, priced per 1,000 calls:

A customer making 750,000 calls crosses into Band 2, so the Band 2 rate applies to all 750,000 calls:

The problem with volume pricing is the pricing cliff.

A customer who crosses a usage threshold suddenly gets the lower rate on their entire usage, not just the units above the threshold. This can create a strange situation where using slightly more actually makes the customer's total bill lower.

For example, compare two customers using just below and just above the 500,000-call threshold:

Customer B uses 2,000 more calls but pays RM741.50 less. That's the pricing cliff: crossing a threshold causes the price to drop suddenly, rather than gradually.

This can create some odd incentives. Customers may deliberately push their usage over the threshold because doing so makes their overall bill cheaper. It can also frustrate customers who use slightly less but end up paying significantly more.

Tiered (graduated) pricing avoids this problem by applying each rate only to the usage within that band. We’ll discuss this pricing model next.

Option 3: Tiered (graduated) pricing

Tiered pricing (also called graduated pricing) charges each unit at the rate of the band it falls in.

Crossing a threshold only affects the price of units above it, not the units already consumed.

Your total bill always increases as usage increases, which protects your margins at every usage level and removes the incentive for customers to game their consumption.

How to calculate a bill with tiered pricing

Using the same structure and the same 750,000-call scenario:

A customer making 750,000 calls pays each band separately:

To recap, with 750,000 calls, volume pricing produces a bill of RM2,625, while tiered pricing produces RM3,375 (RM750 more.)

The bigger difference is how the two models behave as usage grows.

With tiered pricing, each batch of usage is charged at its own rate, so every additional unit increases the bill. There’s no sudden price drop when a customer crosses a threshold, which removes the incentive to manipulate usage.

Option 4: Hybrid model

PAYG, volume, and tiered pricing each have trade-offs:

• PAYG gives you no guaranteed revenue if customers use little or nothing.

• Volume pricing can create pricing cliffs around thresholds. 

• Tiered pricing avoids those cliffs, but your revenue still depends entirely on usage.

In contrast, a hybrid model combines a fixed subscription fee with usage-based charges.

The subscription gives you a predictable baseline each month, usually in exchange for a set amount of included usage. Customers then pay extra when they go beyond that allowance.

How to calculate a bill with hybrid pricing

For example, an API service could charge:

A customer who makes 750,000 calls would pay:

The customer gets a predictable monthly plan, while you earn additional revenue as their usage grows. Even if they use less than 300,000 calls, you still collect the RM500 base fee.

How to choose the right pricing model

The same usage can produce very different bills depending on the pricing model you choose. Use the table below as a starting point, then pressure-test your choice with these questions.

These recommendations are a starting point, but your pricing model should also reflect your costs, customers, and revenue goals. Ask yourself:

• How predictable is your customers' usage? If usage varies significantly month to month, hybrid gives you a more predictable revenue base. If usage is stable and high-volume, volume pricing may be simpler. If you're still learning usage patterns, PAYG is often the easiest place to start.

• How are your costs structured? If your cost per unit is relatively predictable, PAYG or tiered pricing can help protect your margins. If you have significant fixed costs to cover, a hybrid base fee can help.

• Who are your customers? A broad mix of small and large customers tends to suit tiered pricing. If most of your customers are large and have predictable usage, volume pricing can work well, provided you set thresholds carefully.

• How important is predictable revenue? If forecasting matters, hybrid is usually the strongest option because every customer pays a recurring base fee. PAYG and volume pricing leave you more exposed to changes in usage.

For an early-stage SaaS product, PAYG can be a useful starting point while you learn how customers use your product.

Once you have enough data, you can move to tiered or hybrid pricing that better reflects your costs and customers' needs.

Simplify your usage-based billing with Airwallex

Choosing a pricing model is one thing; implementing it can be much harder. Once you start tracking usage, applying different rates, calculating overages, and generating invoices, billing can quickly become complicated to manage manually.

Airwallex helps Malaysian businesses automate these processes without having to build the billing logic themselves. With Airwallex, you can:

• Set up flexible pricing: Configure per-unit, tiered, volume, and hybrid pricing models in one platform.

• Automate billing: Apply your pricing rules to customer usage and generate invoices automatically.

• Bill in multiple currencies: Invoice international customers in their preferred currencies and manage payments across markets.

• Scale as you grow: Update pricing rules and usage tiers without rebuilding your billing setup.

Frequently asked questions (FAQs)

What is the difference between tiered pricing and volume pricing?

Both models use rate bands based on usage thresholds, but they apply those rates differently. Tiered pricing charges each band of usage at its own rate: only the units in a given band are charged at that band's rate. Volume pricing applies a single rate to all units based on total consumption. The result is that tiered pricing produces a higher bill at the same usage level, but eliminates the pricing cliff risk that volume pricing creates near thresholds.

What is a pricing cliff in usage-based pricing?

A pricing cliff occurs in volume pricing when a customer's total usage crosses a threshold and triggers a lower rate on all units, including the ones already consumed. This means a customer just below a threshold can pay significantly more than one just above it for nearly identical usage. It creates an incentive for customers to game their consumption and can feel unfair to customers who land just under a boundary.

When should a SaaS company use a hybrid pricing model instead of pure PAYG?

A hybrid model makes sense once you have enough data on customer usage patterns to set a meaningful base fee and included allowance. If you're running pure PAYG and finding that low-usage months create revenue unpredictability, a hybrid structure gives you a floor without removing the usage-based upside. Most SaaS businesses make this shift as their customer base matures and usage becomes more predictable.

Does tiered pricing always produce a higher bill than volume pricing?

Yes, at the same usage level, tiered pricing will always produce a bill equal to or higher than volume pricing. This is because volume pricing retroactively applies the lowest qualifying rate to all units, while tiered pricing charges the higher rate on early-band units regardless of total consumption. The gap widens as usage scales into lower-rate bands.

What is graduated pricing and is it the same as tiered pricing?

Yes, graduated pricing and tiered pricing refer to the same model. Both terms describe a structure where each band of usage is charged at its own rate, and crossing a threshold only affects the price of units above it. The two terms are used interchangeably across the SaaS industry.

Which usage-based pricing model works best for AI products?

Most AI products (particularly those charging by token, API call, or compute time) default to PAYG or hybrid pricing. Usage can vary dramatically between customers and between sessions, making it difficult to design meaningful tiers upfront. PAYG works well in early stages when usage patterns are unknown. A hybrid structure with a base fee and included token allowance becomes attractive once you have enough data to set thresholds that reflect real customer behaviour.

Sources:

1. https://www.m3ter.com/guides/usage-based-pricing

2. https://www.airwallex.com/my/billing/usage-based-billing