Which pricing model is also known as billing in arrears?

Which pricing model is also known as billing in arrears?

• A. Volume based tiered pricing
• B. Usage based Metered Billing
• C. Graduated pricing
• D. Usage based Licensed Billing

Answer: (B)

Billing in arrears is the idea of charging after the customer has actually used the service. In usage-based metered billing, usage is measured over a period and the invoice is generated after that period ends for the amount used. This ties charges directly to real consumption, which is helpful when usage varies from month to month. For example, if a customer consumes 1,234 units in a month at $0.01 per unit, the invoice at the end of the period would be $12.34. The other pricing styles describe how the price per unit changes with usage (volume-based tiered pricing or graduated pricing) or a license-based approach, but they don’t specify that billing happens after the period of usage, so they aren’t defined by billing in arrears.

Billing in arrears is the idea of charging after the customer has actually used the service. In usage-based metered billing, usage is measured over a period and the invoice is generated after that period ends for the amount used. This ties charges directly to real consumption, which is helpful when usage varies from month to month. For example, if a customer consumes 1,234 units in a month at $0.01 per unit, the invoice at the end of the period would be $12.34. The other pricing styles describe how the price per unit changes with usage (volume-based tiered pricing or graduated pricing) or a license-based approach, but they don’t specify that billing happens after the period of usage, so they aren’t defined by billing in arrears.