Terms for a SaaS product with usage-based pricing

Usage-based pricing moves the argument from what the customer bought to what the meter says, and the terms have to make the meter the contract: what a unit is, how it is counted, which records are conclusive, how prepaid commitments draw down and what overage costs, when invoices are raised and how a customer disputes one, and what happens when usage runs away. Get that wrong and every invoice is a negotiation. I draft those terms for a fixed fee of £995, delivered in five working days.

Who this is for

Software and infrastructure businesses in England and Wales charging by API calls, seats, transactions, storage, compute, messages or any other metered unit, whether pay-as-you-go, on a prepaid commitment, or in tiers with overage.

What matters in usage-based pricing terms

The units, the meter and whose records count

The terms should define each billable unit precisely (what counts as a call, a transaction, an active user, a gigabyte-month), state the metering period, say that the supplier's systems are the record of usage and are conclusive absent manifest error, and describe how the customer can see its usage in real time. A definition the customer can read is the difference between a dispute the supplier wins on the documents and one that needs an expert.

Rate cards, tiers and price changes

The rate card should be a schedule or a page the terms refer to, with tiers and the point at which each applies, and the terms should say how and when rates change: on notice for pay-as-you-go customers, with the right to stop using the service before the change, and not during a prepaid term for committed customers. A term allowing the supplier to change rates at any time without notice is unclear against a business and unfair against a consumer under Schedule 2 to the Consumer Rights Act 2015.

Prepaid commitments, drawdown and overage

Where the customer commits to a spend in return for lower rates, the terms should say that the commitment is payable in full whether or not used, how usage draws down against it, what happens to unused commitment at the end of the term (expires, or rolls over within limits), and that usage beyond the commitment is charged at the overage rate stated. A commitment that is described as a minimum but drafted as a cap is the commonest drafting error.

Invoicing, disputes and late payment

The terms should state the billing cycle, that usage is invoiced in arrears at the end of each period, the payment period, that the customer must raise a billing dispute in writing within a stated period after the invoice with the undisputed part paid on time, and that interest and compensation accrue on late payment under the Late Payment of Commercial Debts (Interest) Act 1998. Card-on-file customers should authorise variable charges in the terms, and consumers should have the pre-contract information the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 require, including how the price is calculated.

Caps, alerts, runaway usage and suspension

The terms should provide for spending caps and alerts where the product offers them, say that a cap the customer sets does not guarantee that usage stops at it, allocate the cost of usage caused by the customer's own misconfiguration or compromised credentials to the customer, and allow the supplier to throttle or suspend where usage threatens the service or an invoice is unpaid after notice. Unauthorised use with the customer's credentials is the customer's responsibility, and access without authority is an offence under section 1 of the Computer Misuse Act 1990.

Fair use, abuse and the rest of the contract

Where anything is unmetered or unlimited, the terms should define fair use and the supplier's right to restrict abuse, and the usage terms should sit within the standard SaaS provisions: licence, data protection under Article 28 of the UK GDPR, a liability cap tied to the fees paid, termination within section 233B of the Insolvency Act 1986 for the supplier, English law and the exclusion of third-party rights under the Contracts (Rights of Third Parties) Act 1999, with usage data described as the supplier's operational data in the privacy notice.

What it costs

SaaS terms of service, £995. Your standard customer-facing terms. Five working days.

Buying online forms the engagement on payment. The scope is what the saas and technology contracts page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how your product is sold, delivered and supported
• Service levels you can meet, with remedies that are proportionate rather than aspirational
• A liability position that is defensible and will survive enterprise procurement
• IP and data provisions that fit together rather than contradicting each other
• A commercial note on where you will get pushback and what is worth conceding
• One round of amendments

What is not included

• Negotiating individual enterprise deals, which I quote separately
• Advice on the law of jurisdictions outside England and Wales
• Technical security certification or audit
• Regulatory advice for regulated sectors such as financial services or health

Questions I am often asked

A customer disputes an invoice because their own logs show lower usage. Whose figure wins?

The supplier's, if the terms make the supplier's metering the conclusive record absent manifest error and the customer raised the dispute within the period. That clause is why the terms are drafted before the first invoice.

A customer's leaked API key ran up a large bill overnight. Do they have to pay?

If the terms make usage under the customer's credentials the customer's responsibility and the customer did not tell you the key was compromised, the charge is payable. Many suppliers waive part of it commercially; the terms make it a choice rather than an obligation.

Can we change our rate card mid-term?

For pay-as-you-go customers, on notice with a right to stop. For customers on a prepaid commitment, not during the term unless the terms say so, and the terms say the committed rates hold for the term.

Related guidance and services

• SaaS and technology contracts, £995, the service this page describes
• Contract review, £495
• Data protection agreements and privacy terms, £795
• API terms of use
• SaaS terms of service for a B2B product

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.