What Is Token Metered Billing?
Token metered billing is a consumption-based pricing model used by AI providers like OpenAI and Anthropic. Instead of a flat fee, you pay for the exact volume of data processed by the model.
How It Works
A token is a discrete unit of text, roughly 4 characters or 0.75 words. Providers charge differently for:
- Input Tokens: The text you send to the AI.
- Output Tokens: The text the AI generates in response.
Note: Output tokens are usually 3-4x more expensive than input tokens.
Token Metering vs. Flat-Rate
Token Metered
Pay only for what you use. Ideal for variable workloads and startups.
Flat-Rate
Fixed monthly cost. Better for large enterprises with predictable demand.
Controlling Costs
- Optimization: Use lean prompts to reduce input token count.
- Spending Caps: Set hard limits in your provider dashboard.
- Curated Assets: Use vetted assets from Tammo.ai that are engineered for efficiency.