Which type of subscription is appropriate for billing customers based on consumption?

A usage-based subscription is designed specifically for billing customers in relation to their actual consumption levels. This model allows businesses to charge customers based on how much of a product or service they use over a given period of time.

For example, telecommunications companies often employ usage-based billing, where customers pay for the number of minutes used or the amount of data consumed. This type of subscription is flexible, as it can adapt to the varying needs of customers, allowing them to pay only for what they actually utilize rather than a fixed amount regardless of consumption.

In contrast, flat rate and fixed subscriptions charge a consistent fee irrespective of usage, which is not suitable for billing according to actual consumption. A tiered subscription typically involves pricing that changes based on set consumption levels, but it still operates within predefined limits rather than billing directly for every single unit of consumption. Therefore, usage-based billing is the most fitting model for this scenario.