The world will spend roughly $723.4 billion on public cloud services in 2025, up from $595.7 billion in 2024.
That single number explains why a new way of buying software is moving from a niche experiment to a mainstream model.
Cloud is bigger, more granular and, importantly, more billable by use. That is the foundation of the “pay-as-you-grow” approach now spreading across small and medium-sized enterprises (SMEs).
Beyond a pricing trend, this sits at the intersection of interest-rate policy, capital scarcity, currency volatility and high cloud budgets.
Those forces are changing how software suppliers set prices, and the consequences reach into productivity, inequality and GDP growth in both emerging and advanced economies.
What is “pay-as-you-grow”?
At its core, pay-as-you-grow ties software expenses to what a business actually uses or earns. It appears in several forms:
- Usage-based billing: charges per CPU hour, API call, gigabyte, transaction or active user.
- Revenue-linked pricing: fees rise or fall with a firm’s revenue or GMV, common in fintech and embedded services.
- Cloud consumption models: infrastructure or platforms billed by the minute, not fixed nodes or seats.
- Metered add-ons: a low base rate, with advanced features billed on demand.
This is a break from the old SaaS playbook of fixed seats, annual contracts and upfront licences that forced SMEs to bear full cost regardless of performance.
Why now: the macro drivers
Several measurable forces are pushing both suppliers and customers towards more elastic pricing.
1. Cloud scale and improved visibility
Cloud spending is growing at double-digit rates, and the size of that market makes granular billing attractive and workable. Cloud providers now provide detailed telemetry and mature billing systems as default infrastructure, not experimental add-ons.
2. Better vendor tooling and industry momentum
Platforms that handle usage pricing, metering and complex invoicing have expanded quickly. Billing and observability tools processed far more usage-linked revenue in 2024 than the year before, and software teams are steadily shifting towards consumption-friendly business models.
3. SME financing constraints
In many countries, SMEs still find it hard to access affordable credit. Surveys consistently show gaps in formal lending and strict collateral requirements. That makes large upfront software commitments difficult, especially outside advanced economies. A flexible, usage-based model reduces that pressure.
4. The digital adoption gap
OECD and government studies show SMEs lag in digital uptake because of cost, limited skills and weak awareness of support programmes. Pay-as-you-grow reduces the initial financial hurdle and encourages more firms to experiment.
5. Market economics for suppliers
Usage pricing expands the addressable market for software vendors. Although platforms focused on usage-based monetisation are a small slice of global cloud spending, their speedy growth shows why both young and established firms are experimenting aggressively with consumption-driven pricing.
The case for SMEs: concrete benefits
Flexible pricing isn’t simply kinder to founders, it changes incentives.
Cash-flow alignment
SMEs face seasonal cycles, late payments and unpredictable demand. Paying in proportion to revenue or activity reduces the mismatch between income and expenses. That alone can improve survival odds during downturns.
Lower barrier to adoption
When tools require no large commitment, more firms try them. That increases the pool of SMEs that become digitally capable and able to scale, a genuine productivity boost.
Resilience to currency swings
In economies with volatile exchange rates, fixed USD-denominated licences can squeeze margins. Usage-based or revenue-linked pricing billed in local currency helps cushion that shock.
Faster innovation for vendors
Vendors using consumption models see exactly which features customers value. That encourages quicker iteration and better alignment between product and real-world use.
These benefits are not automatic. They depend on stable unit economics and transparent billing, both inconsistent across providers.
The blind spots and risks
A balanced view is important. Here are the main failure points.
Bill shock
Usage spikes can produce unexpectedly high bills, whether because of a marketing surge, system misconfiguration or bot activity. For firms with thin cash buffers, this can be worse than a predictable subscription.
Billing complexity
Cloud bills are notoriously difficult to interpret. Without strong cost controls, errors or hidden multipliers can create significant problems. SMEs often lack the tools or expertise to monitor usage closely.
Lock-in through consumption
Low entry costs make adoption easy, but high consumption makes switching expensive. Over time, firms become deeply tied to one provider’s ecosystem.
Misleading “flexible” pricing
Some vendors advertise flexibility but hide minimum commitments, sharp tier jumps or steep overage rates. Without transparency, SMEs carry the risk.
Uneven gains and potential inequality
Regions with better banking systems, digital skills and advisory support are well placed to gain more from flexible pricing. Without targeted support, less-served regions may fall further behind.
Evidence and cues from the market
A few recent indicators reveal:
- Cloud spending forecasts for 2025 show strong growth, confirming that consumption across industries is expanding and becoming more granular.
- Platforms built for usage-based monetisation have grown rapidly, showing suppliers are increasingly comfortable with metered commerce.
- SME finance studies continue to highlight persistent credit gaps, explaining why flexible pricing resonates in markets where upfront spending is hard to justify.
- Reports on SME digital adoption consistently stress cost, skills and awareness as barriers, exactly the areas where pay-as-you-grow reduces friction.
What needs to change
If pay-as-you-grow is going to bring broad economic results, three shifts are key.
1. Transparent billing standards
Clear unit definitions, plain-language invoices and predictable ceilings would limit the fear of surprise bills.
2. Built-in cost controls
Caps, thresholds and real-time alerts should be standard. Vendors who provide these will earn trust quickly.
3. Complementary finance and advisory support
Flexible pricing works best when paired with finance that helps smooth short-term shocks. Banks and fintechs can offer small working-capital lines; governments can support training and digital literacy.
Macro implications, the bigger picture
If pay-as-you-grow scales responsibly, the effects extend far beyond software.
- Productivity: Wider use of digital tools among SMEs increases efficiency across entire sectors, especially in services and retail.
- Resilience: Firms that can scale technology costs up or down are better placed to handle economic shocks.
- Distribution: Without intentional support, benefits may cluster in well-served regions, creating a two-speed digital economy.
- Market structure: Large cloud providers will push deeper into SME operations, raising questions about competition and portability.
Can it bring about mass digital adoption?
It can, but not on its own.
Pay-as-you-grow removes a major obstacle, the upfront cost, and aligns incentives between buyer and supplier. Recent data points to rising demand, improved tooling and steady growth in usage-based models.
But the upside depends on transparency, good product design and complementary finance. Without those, the model risks drifting into volatility and lock-in.
Used well, you get results better than a pricing strategy. It’s a lever for larger and more inclusive digital growth that could help SMEs across different economies compete, survive and grow.
