What does the “pay as you go” model in cloud billing refer to?

The “pay as you go” model in cloud billing refers to charging based on actual resource usage. This model allows customers to only pay for the services and resources they utilize, such as compute power, storage, or data transfer, rather than incurring fixed costs or prepaying a set amount for services they may not use. This flexibility makes it easier for users to manage expenses and scale their usage as their needs change.

In contrast to fixed monthly fees, where a customer pays a predetermined amount regardless of their usage, the “pay as you go” approach aligns costs more closely with business demand. It also differs from absorption of extra charges, which could suggest additional costs beyond the standard billing model. Lastly, it is not related to advance payment for services, which involves paying upfront regardless of usage. This flexible billing model is particularly advantageous for businesses with variable workloads or those exploring new services.