Metered billing
Metered billing is the mechanism that measures and records a customer's consumption of a billable resource — such as tokens, API calls, or compute time — in real time, feeding those measurements into a rate card to calculate what the customer owes at the end of a billing period.
What metering actually measures
Metering captures discrete, timestamped usage events as they happen — one event per API call, per token batch, or per unit of compute consumed — and aggregates them over a billing period into a total quantity per customer, per metric. Accurate metering requires capturing every event exactly once: a dropped event undercounts usage and undercharges the customer, while a duplicated event overcounts and overcharges.
Metering is the mechanism, not the pricing model
Metered billing describes how usage gets measured; usage-based billing describes how a company chooses to price that usage. The two are frequently discussed together because usage-based pricing requires metering, but metering data can also drive other billing shapes — for example, overage billing, where a customer is metered continuously but only charged once cumulative usage crosses a plan's included allotment.