Metered billing is a pricing model in which you pay for a service only based on the level of usage. For example, the cost of a service might depend on time used, volume of data processed, or CPU cycles—depending on the type of service. You receive a monthly bill to pay for your actual level of usage and nothing more.
Metered billing is an advancement made possible by the increasing number of applications and services being delivered via the cloud. Under a metered-billing pricing model, the cloud-based application must be able to track your usage level and automatically calculate a price that matches your usage level. Compared to other pricing models such as multi-year licenses, or even traditional pay-as-you-go models, metered billing enables a much higher degree of agility and flexibility in resource use, provisioning capacity on the fly without incurring excessive costs.
One of the great benefits of public-cloud services and cloud-delivered applications is the ability to adjust your usage quickly and easily in response to changing conditions. An online retailer launching a major sale can spin up new virtual e-commerce servers to handle increasing traffic, without having to pay for that entire capacity full-time.
Metered billing is the natural extension of this trend to service and application billing. It makes it even more efficient to use cloud-hosted applications, since it scales elastically with your workload.