Growth & Strategy
Personas
SaaS & Startup
Time to ROI
Short-term (< 3 months)
Last month, I was reviewing the monthly expenses for one of my SaaS clients, and something made me pause. They were paying $299/month for a billing platform that was essentially tracking API calls and sending invoices. For a startup pulling in $15K MRR, that's a 2% tax on revenue just for billing.
This got me thinking about a pattern I've seen repeatedly: early-stage SaaS companies paying premium prices for billing solutions before they even know if usage-based pricing will work for them. It's like buying a Ferrari before you've learned to drive.
The reality? Most startups don't need enterprise billing platforms from day one. What they need is a way to test whether usage-based pricing actually improves their unit economics without breaking the bank.
In this playbook, you'll discover:
Why expensive billing platforms are overkill for most startups
Free and low-cost alternatives that actually work
How to build your own metered billing system for under $50/month
When to upgrade (and when to stay lean)
Real examples from SaaS companies I've worked with
Let's challenge the assumption that you need to pay thousands to implement usage-based pricing. Sometimes the simplest solution is the smartest solution.
Industry Reality
What the billing industry wants you to believe
If you've researched metered billing solutions, you've probably been fed the same story by every major platform:
"You need enterprise-grade billing from day one." Companies like Stripe Billing, Chargebee, and Recurly will tell you that proper usage tracking requires sophisticated infrastructure, complex rating engines, and bulletproof compliance systems.
Here's what they typically recommend:
Start with their "simple" plan - Usually $200-500/month for basic features
Implement their SDKs and webhooks - Adding technical complexity from week one
Use their reporting dashboards - Creating vendor lock-in through proprietary analytics
Plan for scale - Pay for features you won't need for years
Trust their compliance expertise - Because billing is "too complex" for startups to handle
This advice exists because billing platforms have built their entire business model around convincing you that metered billing is rocket science. They've created a fear-based narrative: "If you don't use our platform, you'll have billing disasters, compliance issues, and angry customers."
The truth? Most SaaS companies are paying for complexity they don't need. Usage-based pricing is fundamentally about tracking events and multiplying by rates. That's not rocket science - it's basic arithmetic that any decent developer can implement in a weekend.
But here's where this conventional wisdom falls short: it assumes all usage-based pricing models are created equal, and that every startup needs the same level of billing sophistication as a company doing $100M ARR. That's like telling every new driver they need a racing helmet and roll cage before they can legally drive to the grocery store.
Consider me as your business complice.
7 years of freelance experience working with SaaS and Ecommerce brands.
The wake-up call came when I was consulting for a B2B SaaS startup in the API space. They wanted to test usage-based pricing because their customers had wildly different usage patterns - some made 1,000 API calls per month, others made 100,000.
Their existing flat-rate pricing was causing two problems: light users felt overcharged, and heavy users were getting massive value while paying the same amount. Classic signs that usage-based pricing might unlock better unit economics.
But here's where it got interesting. The founder had already gotten quotes from three major billing platforms. The cheapest option was $299/month, and that was for their "startup plan" with limited features. For a company doing $12K MRR at the time, that was a significant expense - especially when they weren't even sure if usage-based pricing would stick.
I suggested we step back and ask a different question: "What's the absolute minimum viable way to test this pricing model?"
The goal wasn't to build the perfect billing system. It was to validate whether usage-based pricing would improve their business metrics without betting the farm on expensive infrastructure.
That's when I started digging into free and low-cost alternatives. What I found challenged everything the billing industry had been telling us about the "necessity" of enterprise platforms for early-stage testing.
Here's my playbook
What I ended up doing and the results.
Here's exactly how we built a metered billing system for under $50/month, and how you can replicate it:
Phase 1: The MVP Approach (Free)
We started with the simplest possible implementation using tools they already had:
Usage Tracking: Modified their existing API logging to capture usage data in a structured format
Data Storage: Used their existing PostgreSQL database with a simple usage_events table
Billing Logic: Built a simple script that ran monthly to calculate usage and generate invoices
Invoice Generation: Used a free tool called Invoice Generator API for PDF creation
Payment Collection: Stripe Payment Links sent via email (no subscription management needed)
Total monthly cost: $0 (using existing infrastructure)
Phase 2: The $20/Month Solution
Once we validated that customers actually preferred usage-based pricing, we added some automation:
Automated Invoicing: Used Zapier ($20/month) to trigger monthly billing calculations
Customer Portal: Built a simple dashboard showing usage and billing history
Email Notifications: Automated usage alerts and invoice delivery
Total monthly cost: $20
Phase 3: The $50/Month "Professional" Setup
After six months of success, we upgraded to handle more complexity:
Usage Analytics: Added Mixpanel ($25/month) for advanced usage reporting
Automated Payments: Integrated Stripe Invoicing ($0.4% per transaction)
Usage Alerts: Built proactive notifications for high-usage customers
Tiered Pricing: Added volume discounts and pricing tiers
Total monthly cost: ~$50 + transaction fees
The Free Alternatives That Actually Work:
Open Source Options: Kill Bill (completely free, self-hosted)
Spreadsheet Method: Google Sheets + Google Scripts for basic automation
Database + Cron Jobs: Custom solution using existing tech stack
API + No-Code Tools: Combine free APIs with Zapier/Make for automation
The key insight? You don't need perfect billing software to test usage-based pricing. You need accurate usage tracking and a way to convert that data into invoices. Everything else is optimization.
Quick Start
Start with usage tracking in your existing database - most complex billing features aren't needed for validation.
Open Source
Kill Bill offers enterprise-grade billing completely free if you can handle self-hosting and setup.
No-Code Route
Combine Google Sheets with Zapier automation for a billing system that costs under $30/month.
When to Upgrade
Move to paid platforms only after proving usage-based pricing improves your unit economics significantly.
The results spoke for themselves. Within three months of implementing usage-based pricing:
Customer satisfaction improved: Light users felt they were getting fair pricing, heavy users appreciated transparent costs
Monthly recurring revenue increased 23%: High-usage customers were finally paying proportionally to their value
Customer acquisition improved: Lower entry price point attracted more trial signups
Development time saved: We spent 2 days building the system vs. 2 weeks integrating an enterprise platform
But the most important result? We proved the pricing model worked before committing to expensive infrastructure.
After a year of success with our lean billing system, the company eventually upgraded to a proper billing platform. But by then, they had the revenue and certainty to justify the expense. The free solution had done its job - validating the business model without breaking the bank.
The lesson? Sometimes the scrappiest solution is the smartest solution, especially when you're testing unproven assumptions about your pricing model.
What I've learned and the mistakes I've made.
Sharing so you don't make them.
Here are the key lessons from building billing systems the lean way:
Start with validation, not perfection: Your first goal is proving usage-based pricing works, not building the perfect billing system
Leverage existing infrastructure: Most startups already have the tools needed for basic metered billing
Automate incrementally: Add automation only after manual processes prove the model works
Focus on accuracy over features: Customers care more about correct billing than fancy dashboards
Plan for migration: Build your data structure to make eventual platform migration easier
Monitor usage patterns closely: Free solutions help you understand your billing requirements before committing to vendors
Don't let vendors create artificial urgency: "Enterprise-grade" billing can wait until you have enterprise-grade revenue
The biggest pitfall? Overengineering too early. I've seen startups spend months integrating complex billing platforms before they even knew if usage-based pricing would work for their customers.
When this approach works best: Early-stage SaaS companies testing usage-based pricing, simple usage metrics (API calls, storage, users), and teams comfortable with basic technical implementation.
When it doesn't: Complex multi-dimensional pricing, heavy compliance requirements, or high-volume transactions where manual processes become unsustainable.
How you can adapt this to your Business
My playbook, condensed for your use case.
For your SaaS / Startup
For SaaS startups testing metered billing:
Start with usage tracking in your existing database
Use Stripe Payment Links for simple invoice collection
Build a basic customer portal to show usage history
Automate calculations with simple scripts or Zapier
For your Ecommerce store
For e-commerce stores exploring usage-based models:
Track transaction volumes or storage usage through existing analytics
Use Google Sheets + Google Scripts for automated billing calculations
Send usage-based invoices through your existing email platform
Consider Kill Bill for self-hosted enterprise features at zero cost