***
title: Billing Models Reference
subtitle: Complete reference for all billing models supported by Prolifi — definitions, configuration, and guidance on choosing the right model.
slug: billing-pricing/billing-models
---------------------
For clean Markdown of any page, append .md to the page URL. For a complete documentation index, see https://docs.prolifi.io/billing-pricing/llms.txt. For full documentation content, see https://docs.prolifi.io/billing-pricing/llms-full.txt.
## What this covers
This reference document provides a complete description of all billing models supported by Prolifi. For each billing model, this document covers:
* Definition and how it works
* When to use it — the business scenarios it is designed for
* Configuration overview — the key parameters you set
* Related features and integration considerations
Billing models define the mechanism by which a customer is charged — when the charge is triggered, how the amount is calculated, and how the invoice is structured. Billing models are distinct from **pricing models**, which define how the charge amount is calculated. A subscription may use a recurring billing model (the trigger) with a tiered pricing model (the calculation).
See [Product Catalog & Pricing Reference](/billing-pricing/product-catalog-pricing) for pricing model detail.
***
## Prerequisites
Before configuring billing models:
* Products exist in the product catalog
* Operating entities are configured (required for multi-currency billing)
* Payment gateway is connected (required for automated collection)
***
## Billing Model Overview
| Billing Model | When charged | Amount | Repeats? |
| --------------- | -------------------------------- | ------------------------------ | ----------------- |
| Free | Never | £0 | N/A |
| One-Off | Once, on defined trigger | Fixed or calculated amount | No |
| Recurring | At regular intervals | Fixed or variable per period | Yes |
| Instalment | On schedule | Pre-defined instalment amounts | Yes (fixed count) |
| Usage-Based | At period end | Calculated from usage | Yes |
| Pay-As-You-Go | Per event or from credit balance | Per unit consumed | Yes |
| Pre-Paid Credit | On top-up trigger | Defined top-up amount | Conditional |
| Hybrid | Multiple triggers | Multiple components | Yes |
***
## 1. Free Billing
### Definition
A plan with zero charge. The customer has access to the product or a feature set at no cost. Free billing is used for free tier products, free trials that are set up as subscriptions, internal accounts, and partner access.
### How it works
A subscription is created under a free plan. Prolifi generates no invoices and triggers no payment collection. Entitlements are provisioned normally — so a free tier can have access limits just like a paid plan.
### When to use it
* **Freemium models:** The base tier is free; upsell to paid plans is the revenue model
* **Internal testing:** Developer or staff accounts that should not generate invoices
* **Partner access:** Giving partners access to the product without billing
* **Free trials as subscriptions:** Creating a proper subscription object for a trial period rather than using the trial period configuration on a paid plan
### Configuration overview
* Set plan price to £0 (or configure as a "Free" plan type in the catalog)
* Configure entitlements to define the limits of the free tier
* Configure the upgrade path to paid plans (so the platform can prompt conversion)
* Configure how usage is tracked even on free plans (useful for understanding engagement before conversion)
### Related features
* [Entitlement Management](/billing-pricing/entitlement-management) (define what the free tier includes)
* Upgrade paths (converting free users to paid)
***
## 2. One-Off Billing
### Definition
A single, non-recurring charge. The customer is charged once for a product, service, or event. No subsequent automated billing occurs unless another one-off event is triggered.
### How it works
An order or invoice is created for the customer at a fixed or calculated amount. The invoice is finalised and payment is collected (automatically or manually, depending on collection configuration). Once paid, the billing lifecycle for this order is complete.
### When to use it
* **Set-up fees:** A one-time fee charged at the beginning of an engagement, in addition to an ongoing subscription
* **One-time add-ons:** A product purchased once that does not require ongoing renewal (e.g., a data export, a one-time training session)
* **One-off service charges:** Professional services, implementation fees, or bespoke project billing
* **Overages charged separately:** Usage overages billed as a one-off invoice at period end rather than as a component of the subscription invoice
* **Marketplace purchases:** Individual product or content purchases that are not subscriptions
### Configuration overview
* Define the product in the catalog with a one-off billing model
* Set the pricing (fixed amount, or a pricing model for calculated amounts)
* Configure collection timing (immediate on order creation, or deferred to a scheduled date)
* Configure whether the one-off can be refunded and under what conditions
### Related features
* [Product Catalog](/billing-pricing/product-catalog-pricing) (define one-off products alongside subscription products)
* Proration (not applicable to one-off billing — proration only applies to recurring subscriptions)
* Credit notes (for one-off refunds or billing error corrections)
***
## 3. Recurring Billing
### Definition
A subscription billing model in which the customer is automatically charged at regular, repeating intervals. Recurring billing is the foundation of subscription businesses. The charge amount may be fixed per period or variable (if the plan uses a variable pricing model).
### How it works
1. A subscription is created with a defined billing cycle (e.g., monthly) and an anchor date
2. At each billing period end, Prolifi generates an invoice
3. The invoice is finalised and payment is collected automatically
4. At the next period end, the cycle repeats
5. The cycle continues until the subscription is cancelled, paused, or modified
Prolifi handles the entire recurring cycle automatically — invoice generation, collection, dunning on failure, and period tracking.
### When to use it
* **SaaS subscriptions:** Monthly or annual charges for ongoing platform access
* **Managed services:** Regular service retainer fees
* **Maintenance contracts:** Periodic billing for ongoing service agreements
* **Membership programmes:** Recurring membership fees
### Configuration overview
**Billing frequency:**
* Daily, weekly, monthly, quarterly, semi-annually, annually
* Custom frequency (e.g., every 13 weeks)
**Billing anchor:**
* Subscription start date (billing period is anchored to when the customer subscribed)
* Fixed date (all customers billed on a defined day of the month, regardless of subscription start date)
**Trial period:**
* Number of days before the first billing cycle begins
* Entitlement behaviour during the trial period
**Payment collection:**
* Immediate on invoice finalisation
* Offset from invoice date (N days grace period)
**Plan change handling:**
* Immediate: Plan changes mid-period generate proration immediately
* Scheduled: Plan changes take effect at the next billing period
### Related features
* Proration (for mid-cycle plan changes) — see [Glossary: Billing Terms](/glossary/billing-terms)
* [Dunning & Payment Recovery](/payments-recovery/dunning-payment-recovery) (for failed recurring payments)
* Billing Anchor Date — see [Glossary: Billing Terms](/glossary/billing-terms)
***
## 4. Instalment Payment
### Definition
A billing arrangement in which a total agreed amount is divided into a fixed number of scheduled payments. The customer commits to the total at the outset but pays in instalments. Prolifi manages the instalment schedule, generates an invoice for each instalment, and handles failed instalment payments through the dunning workflow.
### How it works
1. An instalment schedule is defined: total amount, number of instalments, instalment interval
2. The system calculates the instalment amount (total / count, or custom amounts per instalment)
3. On each scheduled instalment date, Prolifi generates an invoice for that instalment's amount
4. Payment is collected for each instalment
5. If an instalment payment fails, the dunning sequence is applied to that instalment's invoice
6. After all instalments are collected, the billing lifecycle for this commitment is complete
### When to use it
* **Annual subscriptions paid monthly (but billed as instalments against a fixed commitment):** The customer commits to an annual amount but pays monthly instalments
* **High-value enterprise contracts:** A £50,000 contract paid in quarterly instalments
* **Hardware + service bundles:** Amortising the cost of hardware across a service contract period
* **Project-based billing:** Breaking a large project fee into milestone-aligned instalments
**The difference between instalment billing and recurring billing:**
* **Recurring billing:** The total amount is open-ended — the customer is billed indefinitely until they cancel
* **Instalment billing:** The total amount is fixed — there are a defined number of payments after which the obligation is complete
### Configuration overview
* **Total amount:** The full commitment amount
* **Number of instalments:** How many payments to split the total across
* **Instalment interval:** Monthly, quarterly, custom
* **Custom instalment amounts:** Whether instalments are equal or custom-sized (e.g., a larger first instalment, smaller remaining)
* **Failure handling:** What happens when an instalment fails — dunning the specific instalment invoice; does failure of one instalment affect the rest of the schedule?
### Related features
* [Dunning & Payment Recovery](/payments-recovery/dunning-payment-recovery) (applied per instalment invoice)
* Invoice management (each instalment generates a separate invoice)
* Credit notes (for instalment refunds or early termination credits)
***
## 5. Usage-Based Billing
### Definition
A billing model in which the charge for each billing period is determined by how much the customer consumed or used the service during that period. Usage events are tracked throughout the billing period, aggregated at period close, and the total is used to calculate the invoice amount.
### How it works
1. Usage events are sent to Prolifi by your application as customers consume metered features
2. Prolifi aggregates events per usage metric per billing period
3. At billing period close, the aggregated usage total is retrieved
4. The configured pricing model (per-unit, tiered, volume, stair-step, etc.) is applied to the usage total to calculate the charge
5. An invoice is generated for the calculated amount
6. Payment is collected
7. The usage counter resets for the next billing period
### When to use it
* **API billing:** Charge per API call, per token, per request
* **Cloud infrastructure:** Charge per compute hour, per GB stored, per GB transferred
* **Utilities:** Charge per kWh, per litre, per m3
* **AI services:** Charge per model inference, per token consumed, per compute minute
* **Messaging platforms:** Charge per message sent, per SMS delivered
* **SaaS with usage tiers:** A flat subscription that converts to usage billing above a threshold
### Configuration overview
**Usage metric:**
* The metric definition that events are aggregated against
* Aggregation method: sum (most common), count, max, last value, percentile
**Pricing model applied to usage:**
* Per-unit (same rate per unit for all quantities)
* Tiered (different rates per band, applied to units within each band)
* Volume (rate determined by total volume, applied to all units)
* Stair-Step (flat price per volume threshold)
**Billing period:**
* The period over which usage is aggregated (monthly, quarterly, etc.)
* Whether the usage counter resets at each period or accumulates
**Pre-paid usage (hybrid with pre-paid credit):**
* Customers can pre-purchase usage credits that are consumed by usage events
* Overage billing applies when the credit balance is exhausted
### Related features
* Usage Tracking (the mechanism for sending events to Prolifi)
* Usage Metrics (the aggregation configuration)
* [Entitlement Management](/billing-pricing/entitlement-management) (entitlements can also be usage-based)
* Pre-Paid Credit Billing (for pre-purchase of usage credits)
***
## 6. Pay-As-You-Go (PAYG)
### Definition
A billing model where customers pay only for what they consume, with no mandatory recurring commitment. PAYG can operate from a pre-loaded credit balance (customer buys credits, which are consumed by usage) or as real-time or period-based billing with no minimum charge.
### How it works
**PAYG from credit balance:**
1. Customer purchases a credit balance (via a one-off payment or a top-up)
2. As the customer uses the service, usage events deduct from the credit balance
3. When the balance is low, the customer is notified and prompted to top up
4. When the balance reaches zero, access may be restricted until a top-up is made
5. Optionally, Prolifi can auto-trigger a top-up invoice when the balance drops below a threshold
**PAYG with accumulated billing:**
1. Customer uses the service — usage is tracked as events
2. At the end of a defined period (daily, weekly, monthly), Prolifi generates an invoice for the total usage
3. If usage is zero for the period, no invoice is generated
4. There is no minimum charge — the customer pays only for what they used
### When to use it
* **AI API services:** Credit-based model where API calls consume credits; top up when low
* **Telecoms pre-paid:** Top up a credit balance, consume via calls, data, and messages
* **Developer tools:** Freemium + PAYG — free tier with a limited credit allocation; purchase more credits for continued use
* **Event-based services:** SMS platforms, notification services, or transaction-based tools where usage is highly variable
### Configuration overview
* **Credit balance setup:** Starting balance, top-up amounts, minimum top-up
* **Low-balance threshold:** At what balance level to notify the customer
* **Auto-top-up:** Whether to automatically charge the customer when the balance drops below threshold
* **Expiry:** Whether purchased credits expire after a defined period
* **Overage behaviour:** What happens when the balance reaches zero (access restriction, hard stop, or auto-top-up)
### Related features
* Pre-Paid Credit Billing (the credit balance mechanism is shared)
* Usage Tracking (events consume the credit balance)
* [Entitlement Management](/billing-pricing/entitlement-management) (the credit balance can function as a variable entitlement)
***
## 7. Pre-Paid Credit Billing
### Definition
A billing arrangement where customers purchase a credit balance upfront, then draw it down as they use the service. Pre-paid credit is distinct from PAYG in emphasis: while PAYG focuses on the consumption model, pre-paid credit billing focuses on the purchase and management of the credit balance itself — including top-ups, expiry, and balance management.
### How it works
1. Customer purchases a credit pack — a defined number of credits at a defined price
2. Credits are added to the customer's credit balance in Prolifi
3. Usage events or service consumption reduce the credit balance
4. The customer can purchase additional credit packs at any time (manual top-up) or configure auto-top-up
5. Credits may expire after a defined period or persist indefinitely (configurable)
6. When the credit balance reaches zero, access behaviour is configured (restrict, auto-top-up, or allow overdraft to next invoice)
### When to use it
* **Prepaid professional services:** A retainer of consulting hours purchased upfront and drawn down per engagement
* **AI token packs:** Purchase 1,000,000 tokens; use them over any period
* **Loyalty credits:** Issue promotional credits that customers can spend on services
* **Enterprise credit arrangements:** Pre-purchase of a defined service volume at an agreed price
### Configuration overview
* **Credit pack denominations:** The available pack sizes and their prices
* **Credit-to-value conversion:** How many service units one credit represents
* **Expiry configuration:** When (if ever) purchased credits expire
* **Top-up trigger:** Manual top-up only, or automatic when balance drops below threshold
* **Auto-top-up amount:** How many credits to purchase on automatic top-up
### Related features
* Promotional Credits (issue credits as a marketing or loyalty tool rather than purchased credits)
* Discount Management (discounts on credit pack purchases)
* [Entitlement Management](/billing-pricing/entitlement-management) (credit balance as an entitlement)
***
## 8. Hybrid Billing
### Definition
A billing configuration that combines two or more billing models within a single subscription or plan. The most common hybrid configuration is a recurring fixed fee (base subscription) combined with usage-based charges (overage or consumption component).
### How it works
In a hybrid billing configuration, multiple charge components are defined for a single plan. On invoice generation, each component is evaluated independently according to its own billing logic, and all components are combined into a single invoice with separate line items.
**Example — Hybrid: Fixed + Usage-Based:**
* Fixed component: £500/month base fee (recurring)
* Usage component: £0.01 per API call beyond 50,000 calls (usage-based)
* Month with 80,000 calls: Invoice = £500 (fixed) + £300 (30,000 x £0.01) = £800
### When to use it
* **SaaS with included usage + overage:** A base plan includes X API calls; beyond X, usage is billed at a per-call rate
* **Platform + consumption:** A platform access fee plus variable consumption charges (compute, storage, egress)
* **Service + materials:** A recurring service management fee plus variable materials or pass-through costs
* **Base + seat fees:** A fixed platform fee plus a per-seat charge for additional users beyond the base allocation
### Configuration overview
* **Component 1 (typically fixed):** Billing model: Recurring. Pricing model: Fixed. Amount: £X/period.
* **Component 2 (typically variable):** Billing model: Usage-Based. Pricing model: Per-unit, tiered, or volume. Threshold: Above N units (if included usage exists).
* **Included usage threshold:** The quantity of usage included in the fixed component before overage billing begins
* **Invoice presentation:** Whether components appear as separate line items or aggregated (typically separate for transparency)
* **Sequencing:** Whether both components are billed on the same invoice at the same time, or whether the fixed component is billed upfront and the variable component billed at period end
### Related features
* Recurring Billing (the fixed component)
* Usage-Based Billing (the variable component)
* [Entitlement Management](/billing-pricing/entitlement-management) (the included usage threshold can be managed as an entitlement)
* Invoice line item configuration
***
## Choosing the Right Billing Model
Use this decision framework to select the appropriate billing model for a given plan:
```mermaid
graph TD
A{"Is the customer charged at all?"} -->|No| B["Free Billing"]
A -->|Yes| C{"One-time purchase only?"}
C -->|Yes| D["One-Off Billing"]
C -->|No| E{"Fixed amount paid in instalments?"}
E -->|Yes| F["Instalment Billing"]
E -->|No| G{"Charge repeats on a regular schedule?"}
G -->|Yes| H{"Includes variable usage component?"}
H -->|No| I["Recurring Billing"]
H -->|"Yes, with fixed component"| J["Hybrid Billing"]
H -->|"Yes, entirely variable"| K["Usage-Based Billing"]
G -->|No| L{"How does the customer pay?"}
L -->|"Pre-purchase credits"| M["Pre-Paid Credit Billing"]
L -->|"Per event / per period"| N["Pay-As-You-Go"]
```
***
## Cross-references
* [Glossary: Platform Concepts](/glossary/platform-concepts) — full definitions of all billing model terms
* [Product Catalog & Pricing Reference](/billing-pricing/product-catalog-pricing)
* [Dunning & Payment Recovery](/payments-recovery/dunning-payment-recovery)
* [Reconciliation Workflows](/reporting/reconciliation-workflows)