You may have noticed a new component in the Chargify UI - the Prepaid Usage component!

Prepaid usage allows you to maintain a recurring, predictable revenue stream while still allowing your customers to be charged based on consumption. This is achieved through an upfront fee that is based on a quantity (or prepayment) sometimes thought of as a commitment. Your customer then draws down against their commitment. Once their entire commitment amount is used up they are charged overage fees at a ‘burst over’ rate. Overage charges are then calculated and included in your customers' regular billing cycle and invoice, this allows you and your customer to maintain a single source of truth on what they are consuming and being billed for.

With prepaid usage, your customers' prepaid amounts can 're-up' every month (I commit to 50 server hours each month) or can extend out for longer periods of time (I commit to 550 server hours for the year).

Companies often move to prepaid usage models because they can incentivize their customers to increase upfront commitments or prepaid quantities, by offering a reduced price point for prepaid units or an increased rate for overage units. It is also possible to allow your customers' prepaid quantities to expire or rollover to a following period.

Our Chargify prepaid usage functionality also supports your revenue and accounting compliance needs. As your customer consumes their prepaid amounts, Chargify tracks their consumption for appropriate revenue reporting and recognition. This is all handled with a single component in the Chargify system, reducing the complexity of setup and maintenance for your team.

To learn more about the prepaid usage billing model, see our documentation >