Lago sells licenses not fees

This pricing model makes Lago a software vendor, not a payments toll collector. For a company billing on millions of API calls or tokens, that matters because the bill for billing does not rise every time customer usage spikes. Lago makes money by selling premium billing software, cloud hosting, and advanced finance features, while Stripe and similar platforms use billing to expand the take rate they already earn from moving money.

• Lago is built to sit above payments, not inside one payment rail. It ingests usage events, turns them into invoices, and can send the payment through Stripe, GoCardless, or Adyen. That lets a customer keep billing logic separate from whichever processor moves the funds.
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• Payment centric rivals price differently because billing is part of a larger bundle. Stripe Billing was priced at about 0.7% of volume on top of core payment fees, and Stripe later bought Metronome for $1B to deepen usage based billing and pull more of the revenue stack into one system.
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• This difference gets sharper as customers become more usage heavy. Legacy and newer competitors like Chargebee, Orb, and m3ter are described as still using percentage based fees, while Lago sells commercial licenses for features like dunning, multi entity billing, analytics, and managed cloud operations.
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The market is moving toward a split between bundled payment stacks and independent billing infrastructure. As AI and infrastructure companies push more events through their pricing engines, fixed software pricing becomes more attractive, and Lago has room to move upmarket by adding compliance, collections, and broader revenue operations tooling.