TL;DR: Overage pricing is a simple usage-based model where customers get a set amount of usage included in their plan, and pay per unit beyond that threshold. It blends predictability (the base plan) with elasticity (overages), making it a common choice for SaaS and AI companies.
Overage pricing is currently one of the most common ways SaaS companies package usage. Every plan comes with an included allotment (e.g. calls, emails, events, storage). Once customers hit that threshold, they pay per unit beyond it.
Think of it as pay-as-you-go with a buffer. Buyers get predictability from the included buffer, while vendors capture upside when usage grows. It’s popular because it feels familiar, scales smoothly, and works across everything from email tools to AI APIs.
You don’t have to look far to see overage pricing in action—most customers have already experienced it in one form or another. Here are some well-known patterns:
Mailchimp: Plans include a set number of contacts and email sends; anything beyond is billed at an overage rate.
Mixpanel: Customers commit to a block of tracked events, with overages charged for extra events.
Datadog: Combines commit levels with on-demand overage rates for metrics and logs.
Telecoms: Mobile data plan included 1000 minutes, then you pay per-unit once you've used your free minutes.
AI APIs: A plan might include 1M tokens or 10K images, with overages billed per unit beyond that.
Overage pricing strikes a balance that resonates with both buyers and vendors, which is why it shows up so often in fast-growing SaaS and AI products.
Predictability with flexibility: Customers have a clear baseline cost while still being able to grow past their initial limits.
Lower barrier to entry: New customers can start small without over-committing.
Aligned with bursty usage: AI workloads often spike; overage pricing accommodates surges without forcing upfront commitments.
Upside for vendors: The base plan provides recurring revenue, while overages capture growth as customers scale.
Overage pricing is popular because it’s easy to understand, easy to implement, and aligns costs with value. Customers know their baseline commitment but aren’t capped when they outgrow it. For AI and fast-scaling companies, that balance of trust and flexibility makes overage pricing a proven way to grow.
If you're interested in learning more, checkout our deeper dive into overage pricing and when to use it.
