What is Metered Licensing?
Metered licensing is a software licensing model in which usage is measured and recorded in real time, and license rights or billing are tied directly to consumption metrics. Unlike flat-fee or seat-based models, metered licensing tracks what customers actually use, such as feature invocations, API calls, transaction counts, or active sessions, and enforces or bills accordingly. It requires robust usage metering infrastructure and provides vendors with granular visibility into how their software is used in production.
Examples
- An ISV meters the number of documents processed by its software per month and licenses customers based on document volume tiers.
- A security software vendor uses metered licensing to track the number of endpoints actively protected, billing customers based on the peak monthly count.
- A licensing platform meters license checkout events for floating licenses, providing the vendor with concurrency utilization data and enabling usage-based billing.
- A cloud software vendor meters feature invocations and enforces soft and hard limits based on the customer's license tier, notifying users approaching their metered threshold.
Common Applications
- Usage-based billing aligned to product consumption metrics
- Floating and concurrent license utilization tracking
- API and platform product metering for developer customers
- Enterprise license true-up based on actual peak usage
- IoT and embedded device licensing based on active device counts