Most writing about usage-based pricing is aimed at the companies selling it. Metering platforms, billing infrastructure, advice on migrating your pricing model. Very little is written for the person who has to put a number in next year’s budget for something with no fixed price.
This is that. It assumes you did not choose this model and cannot opt out of it.
Why the usual budgeting approach fails
A seat-based line item is trivial to forecast. Headcount times rate, adjusted for growth. You could do it on a napkin and be close.
Usage is not distributed like headcount. It is distributed like a power law, and this is the single fact that breaks most forecasts.
Within the same plan tier, individual consumption commonly varies by more than an order of magnitude. Your median user is not your average user, and your average is dragged around by a handful of heavy ones. Budget from the median and you will be wrong by a multiple. Budget from the mean without knowing its shape and you will still be wrong, because the mean is unstable when the tail moves.
The practical consequence: a pilot with ten people tells you very little about a rollout to two hundred, unless you looked at the distribution rather than the total.
Build the forecast from the tail
Run a pilot long enough to see a full work cycle, then throw away the average.
What you want is per-user consumption sorted highest to lowest. Look at your top decile, because they are the ones who will define your bill, and look at what makes them different. Frequently it is a role rather than a personality: the people doing the work the tool is genuinely good at will use it constantly, and they are the reason you bought it.
Then forecast three numbers rather than one. What it costs if usage looks like the pilot. What it costs if the heavy decile becomes a quarter of the org as the tool catches on, which is the realistic case for anything useful. And what it costs at the ceiling, which is the number your CFO will ask for and the one nobody prepares.
Present all three. A single figure implies a confidence the model does not support, and you will own that number when it is wrong.
Where the surprises come from
Rarely from people using the tool more. Usually from something changing underneath.
- A model swap. The vendor routes to a newer, larger model. Your behaviour is identical and your consumption is not.
- A feature that quietly costs more. Agentic workflows, background jobs and long-context features consume dramatically more than chat, and they usually launch as an improvement rather than as a price change.
- Automation. Something gets wired into a pipeline and starts running without a human triggering it. The bill stops being a function of headcount, and no seat-based instinct catches it.
- The conversion rate. If your contract lets the vendor change what a credit buys, they can raise your price without touching a published figure.
Only the third of those is under your control, which is why the contract questions matter more here than in any seat-based deal.
Controls worth having
In descending order of how much they help.
- A hard cap you administer. Not a notification. A ceiling where spend stops. Vendors do not offer this readily and it is the most valuable thing you can negotiate.
- Per-user or per-team limits. Turns one uncapped organisational exposure into many small bounded ones, and it puts the decision next to the person who understands the work.
- Alerts at 50, 75 and 90%. Standard advice, worth doing, and weaker than it sounds. An alert tells you the money is already gone.
- A monthly actuals review for the first quarter. Boring and effective. Most overruns are visible for weeks before anyone looks.
The negotiation is different too
Discount percentages matter less than they do on a subscription, because the discount applies to a quantity nobody has agreed on. What matters is the floor, the ceiling and who controls the rate.
Push for a committed spend with a rate that improves at volume rather than a large allotment you may not use. Push for unused capacity to roll. And get a written commitment that the conversion rate is fixed for the term, which is the clause that decides whether your forecast means anything at all.
If a vendor will not fix the rate, that is not a detail to concede late in a negotiation. It is the price being variable at their discretion, and it should change what you are willing to commit.
What credits are and how to read them is in AI Credits Explained. The structural shift behind all of this is in The End of Per-Seat Pricing. CopperFeed records billing model changes as they happen, including the ones that arrive without an announcement.
General guidance, not procurement or financial advice. Contract terms vary and yours govern.