Flexible billing models are gaining traction across the SaaS industry—and for good reason. As buyers increasingly demand tighter alignment between cost and value, vendors are shifting toward consumption-based billing. The core idea is simple: pay for what you use.

But for CFOs, that “simple” idea introduces a level of operational complexity that’s anything but.

When implemented well, consumption-based billing brings agility, transparency, and stronger alignment between vendor success and customer outcomes. When handled poorly, it leads to budget overruns, unpredictable spend, and limited visibility into ROI.

According to Gartner, by 2027, 80% of organizations will be buying at least part of their SaaS portfolio via consumption-based billing—up from less than 20% in 2023. That’s a massive shift in just a few years.

While much of this momentum is vendor-driven—allowing for more granular monetization, especially from power users—the implications for finance leaders are far more nuanced.

In this guide, we’ll break down the models behind consumption-based billing, explore the tradeoffs, and show what CFOs need to take control of this increasingly common reality.

What 'Consumption-Based' Really Means

Let’s start with the basics. “Consumption-based billing” is often used interchangeably with terms like usage-based, elastic pricing, or pay-as-you-go. But in practice, it’s not one-size-fits-all.

There’s no single model—there’s a spectrum of billing approaches that fall under the consumption umbrella, each with its own implications for predictability and control:

• Pay-as-you-go (PAYG): The most straightforward model—no commitments, no tiers. You’re billed purely based on usage.
• Transaction-based: Charges are tied to specific events, like payments processed or messages sent. Common in fintech and communications.
• Credit or token-based: Customers buy a pool of credits that can be spent across features or services. Offers flexibility, but can obscure real costs.
• Hybrid models: A fixed base fee plus variable usage—designed to offer predictability while retaining some elasticity.

Many vendors use “consumption-based” as a marketing term, but the fine print often includes committed usage, minimums, or fixed thresholds that limit flexibility.

For finance teams, the key is to look beyond the label. What matters isn’t what the pricing model is called—it’s how it works in practice, and what you’re actually being billed for.

Billing Models in Practice: Pros and Tradeoffs

As SaaS companies adopt more flexible monetization strategies, a range of consumption billing models are taking hold across the industry. For CFOs, the rise of SaaS consumption billing introduces new opportunities—but also new responsibilities. Each model brings unique benefits and risks, requiring finance leaders to rethink how they manage forecasting, cash flow, and contract terms.

Here’s a closer look at the key models shaping today’s SaaS billing flexibility landscape:

Pay-as-you-go billing (PAYG) in SaaS offers maximum elasticity. You’re billed strictly based on usage—no upfront commitments, no fixed tiers. This model is ideal for organizations that want to scale usage dynamically. But it can quickly become a budgeting headache if usage spikes due to growth, seasonal demand, or internal mismanagement. Without guardrails, volatility can undermine predictability.

Transaction-based SaaS billing ties charges to specific, measurable events—such as payments processed, emails sent, or support tickets resolved. This approach creates a strong alignment between cost and value, particularly when the metric directly reflects business outcomes. However, vendors often apply premium per-unit pricing, which can add up quickly as transaction volumes grow.

Credit-based billing in SaaS provides internal flexibility, especially in multi-team environments. Organizations purchase credits or tokens that can be used across different features, departments, or products. While this model simplifies procurement, it also introduces complexity. Credits rarely correlate cleanly with value, and tracking usage across teams can lead to confusion and overspending—especially without real-time visibility.

Hybrid SaaS billing models combine fixed base fees with variable consumption pricing above a certain threshold. This structure provides a level of budget stability while still accommodating scale. It’s a popular model among enterprise vendors, but it often favors the provider. For instance, contracts may allow usage to scale up—but not down—locking customers into higher commitments even if usage declines.

These evolving usage-based SaaS billing models offer clear advantages: better alignment with customer value, monetization of power users, and more granular insights into product engagement. But they also demand a more sophisticated financial strategy.

One common hidden cost? Lack of true elasticity. Take a contract that locks in 200 users. Six months later, your needs drop to 170—but you're still paying for 200. This lack of downward flexibility undermines the promise of “flexible billing” and underscores why SaaS consumption billing can’t be treated as a set-it-and-forget-it decision.

Finance teams must move beyond traditional budgeting frameworks to understand how these billing models impact profitability, retention, and long-term scalability.

The CFO’s Dilemma: Flexibility vs. Forecastability

CFOs are the ones tasked with reconciling all this billing innovation with financial stability. And the reality is clear: while SaaS vendors often pitch flexibility, the underlying contract terms remain rigid.

For finance leaders, this creates a major planning burden. Consumption-based models don’t just change how software is billed—they fundamentally shift how it’s budgeted, managed, and audited.

Three core challenges consistently surface:

1. Limited visibility into usage data.
2. Without real-time metering, finance teams often discover overages only when the invoice lands—far too late to take corrective action.
3. Inability to simulate spend scenarios.
4. If the business scales or usage patterns shift, what happens to costs? Most CFOs can’t answer that confidently, because the tools to model those scenarios don’t exist—or aren’t owned by finance.
5. Technical bottlenecks.
6. Changing billing logic or pricing models often requires engineering support. That slows down decision-making and leaves finance dependent on other teams to execute.

These challenges only grow more complex when dealing with multiple vendors, each with different billing structures, contract terms, and data formats. Even companies that negotiate favorable commercial terms often struggle to operationalize them due to fragmented internal systems and processes.

What’s Really Holding Companies Back? It’s Not the Pricing—It’s the Billing Infrastructure

On paper, flexible billing should make spend more efficient. But in practice, it often creates chaos—not because the pricing model is flawed, but because the organization isn’t built to support it.

At the heart of the issue is infrastructure.

Most companies lack the systems needed to track, manage, and forecast consumption in real-time. Usage data is often siloed within product or engineering. Billing data might not be reconciled until month-end. And finance teams are left piecing it all together manually—usually in spreadsheets.

Without integrated systems, flexible billing becomes anything but flexible. Instead of unlocking efficiency, it introduces noise, lag, and friction between teams.

This is where many SaaS buyers stumble. The real problem isn’t the contract—it’s the operational layer that’s supposed to support it.

What CFOs Need to Take Ownership of the Billing Process

To fully unlock the benefits of consumption-based billing, CFOs need more than negotiation leverage. They need control, visibility, and autonomy. That means shifting from reactive budgeting to proactive billing strategy—without relying on engineering to make it happen.

Here’s what that looks like in practice:

1. Ownership without tech bottlenecks

CFOs should be able to manage billing logic, adjust pricing rules, and run simulations—without filing a Jira ticket. The days of relying on product or engineering to experiment with pricing need to be over.

2. Real-time metering and usage tracking

Without accurate, up-to-date usage data, consumption-based billing turns into guesswork. Finance needs granular visibility into who’s using what, when, and how that maps to cost and value.

3. Predictability through simulation

It’s not enough to know what happened last month. CFOs need tools that allow them to model “what-if” scenarios—What if usage grows 15%? What if a new feature drives a surge in adoption? Scenario planning is essential to protect margins and avoid budget surprises.

With these building blocks in place, finance leaders can stop playing catch-up—and start leading. They can negotiate smarter contracts, build more accurate forecasts, and play an active role in scaling monetization strategies that align with both cost and customer success.

Closing Thoughts: Consumption-Based Billing Isn’t Just a Contract Term—It’s a Strategic Capability

As vendors race to offer more flexible billing options, one thing is clear: consumption-based models aren’t a trend—they’re the new reality. SaaS billing flexibility is here to stay. The question is no longer if your organization will adopt them, but how well you’ll manage them.

For CFOs, this shift is more than a billing challenge. It’s a chance to completely rethink saas pricing models and the role of finance in the fast-moving Software as a Service economy. Static budgets and rearview-mirror forecasting won’t cut it anymore. What’s needed is a more dynamic, real-time approach—one where finance leads the charge.

That requires investment—in systems, processes, and internal ownership. But the payoff is significant: better cost-to-value alignment, stronger financial control, and a finance function that’s not just reporting results—but helping shape them.

Consumption-based billing can deliver real agility and precision. But only if CFOs have the tools to manage it with clarity and confidence.