Customers pay a one-time fee for a service or a product and then have unlimited access to it. Their primary advantage is that they can consume indefinitely while maintaining complete control over their costs. It remains financially viable for the business if customers who use the service at higher-than-normal rates are offset by those who use it infrequently. In a few instances, businesses must impose upper limits on consumption in order to avoid incurring excessive costs; while this violates the fundamental principle of unlimited use, it is the only way to ensure that the transaction remains profitable.

 When and how to apply Flat Rate:

If you meet one or more of the following criteria, Flat Rate is likely to work for you. To begin, you must have manageable costs, for example, if your business is an Internet one with low marginal costs. Second, your customers face diminishing marginal utility: with each additional slice of pie consumed, their desire for another decreases. Thirdly, billing customers at the Flat Rate is more cost effective than billing them for each outlay. Well-known companies that use this pattern are Spotify and Netflix.