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Multi-product, multi-entity, multi-geography, multi-everything. As you scale, billing gets more and more complex until homegrown systems crumble and you need to hire engineers just to keep using legacy vendors.
Lago is the open-source billing system that supports all common pricing models (including AI pricing like credits, usage-based, and outcome-based pricing) without turning billing into a nightmare.
Don’t tie yourself to a vendor. Lago lets you inspect the codebase, self-host on your own premises (or VPC), and customize anything you want.
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📌 Save the Date: Thursday, November 6th at 12:30pm EST
We’re hosting a 60-minute Office Hours session with Ulrik Lehrskov-Schmidt from Willingness to Pay. Ulrik is fresh off a 6-part webinar series about Agentic AI pricing. The event is AMA-style and we’ll be collecting questions in advance. Drop questions in this thread and add the event to your calendar.
Complex Billing (and what to do about it)
Every scaling tech company eventually faces the same dilemma:
Keep patching together billing workarounds or devote valuable engineering time to a complex system that’s difficult to maintain.
While leading growth at Qonto, Lago CEO
realized that billing systems are among the hardest and least rewarding parts of modern software.“No engineer wants to work on billing,” Chuong explains. “They don’t get any social credit for it. People like me, the revenue owners, are constantly asking why it’s so complicated and taking so long, while the engineers are dealing with incredible complexity behind the scenes.”
This tension forces a critical decision – build or buy?
Building your own billing system means building everything from scratch and not accounting for features you’ll need in the future, which creates the duct-taped internal systems many struggle with today.
Buying a billing system may force you to contort your business logic to fit it. Many billing systems are super rigid. Companies buy them, then build parts themselves (e.g. credits or usage metrics) because the system doesn’t support certain features.
Companies with complex requirements often turn to building homegrown systems despite the engineering burden because their billing needs have outgrown what standardized solutions can handle. This is one reason companies put off pricing projects. If every update requires new code, the project seems daunting.
But that mindset doesn’t cut it anymore.
The era of AI-powered SaaS demands iterative pricing and packaging. The number of companies with complex requirements is growing as more companies introduce AI features that have different unit economics, and make margins more volatile.
So what should a company with complex billing actually do?
First, let’s define complex billing.
The Four Dimensions of Complex Billing
Lago serves companies that are considering building billing in house. Typically, this is because they’ve grown too complex for off-the-shelf solutions or because they’re fed up with their homegrown system.
SaaS leaders and operators often equate complex billing with usage-based pricing, but usage dynamics are only one factor.
According to Chuong, complexity emerges from four dimensions of “hybridness,” the gray areas between black-and-white (e.g., pure subscription or pure PAYG) pricing models:
1. Hybrid Pricing Structures The most obvious complexity comes from mixing subscription and usage models. Think subscriptions that include usage allowances with overages, or minimum commits with maximum usage caps. At Qonto, for example, customers paid subscriptions that included card limits and transaction volumes, plus fees for foreign exchange transactions and ATM withdrawals. Each a is different revenue stream with distinct pricing logic, and often owned by different teams – compounding the frustration.
2. Hybrid Go-to-Market Motions Companies running both self-serve and sales-led motions face another layer of complexity. “Everyone gets the same plan in self-serve, but every sales rep will customize deals to close them,” notes Chuong. This creates countless edge cases that rigid billing systems struggle to accommodate.
3. Multi-Product Architectures As companies expand their product suite, each offering may require different pricing models. One product might charge per seat, another based on API calls, and a third on data volume, all needing to work together seamlessly.
4. Geographic Variations Global expansion introduces country-specific pricing, currencies, and regulatory requirements that compound the other dimensions of complexity.
The irony? These complexities represent SaaS scaling best practices. Most SaaS leaders want to offer hybrid pricing, PLG plus sales-led growth, multi-product offerings and have a global presence.
This which means over time, billing is destined to become more complex, and as it does, billing infrastructure systems shift from back-office utilities to strategic levers.
Why Billing Infrastructure Is Mission-Critical
Billing infrastructure has quietly become one of the most important layers in modern SaaS architecture, and Chuong identifies 3 trends that are putting it squarely in the spotlight:
AI and Usage-Based Models: The AI boom has normalized usage-based pricing, with tokens, API calls, and compute hours becoming standard billing units. These models require sophisticated metering and billing capabilities that legacy systems can’t handle.
Engineering Integration Across Functions: The rise of growth engineers, revenue operations, and technical go-to-market roles means more teams can implement and customize technical billing solutions.
Growing Market Awareness: “When we launched on Hacker News three years ago, people asked why anyone needed a billing product,” Chuong recalls. “Now everyone understands it’s not that easy. The market education is happening, and competition is actually helping validate the category.”
As the category matures, the conversation is shifting from why billing matters to how it should be built.
Why Open Source Billing?
Lago’s core insight is that the companies choosing to build billing in-house share three core requirements that closed-source vendors can’t satisfy:
Transparency: “Billing is mission-critical,” Chuong emphasizes. “Companies don’t want a black box. They need to understand how it works so they can fix issues and implement it properly.” Open source code provides complete visibility into the system’s logic.
Control: Companies want billing deployed in their own environment, alongside the rest of their stack. This is especially important for large enterprises, regulated industries, and infrastructure companies. However, more and more SaaS companies are realizing they don’t want to depend on external providers for something so fundamental to their business.
Extensibility: Edge cases are inevitable, especially considering how many functions interface with billing. With Lago, enterprise customers maintain their own repositories, building custom features while still benefiting from core updates. “They merge code regularly to the main branch,” Chuong explains, “getting our improvements while maintaining their customizations.”
Beyond transparency, control, and extensibility, open source introduces a subtler advantage — accountability.
“When your code is open, you can’t hide anything,” Chuong notes. “Every time we write code, we ask ourselves: are we comfortable if someone points this out on X? It forces a level of quality and transparency that closed-source companies don’t face.”That level of accountability is why open source billing isn’t merely a development choice; it’s becoming a strategic one.
That level of accountability is why open source billing isn’t merely a development choice; it’s becoming a strategic one.
The Path Forward
Open source billing represents more than a technical choice. It’s a philosophical stance about how critical infrastructure should be built and deployed. For companies whose billing complexity has outgrown standard solutions, the choice often comes down to building in-house or adopting an open source platform.
By providing transparency, control, and extensibility, open source billing offers a compelling third path. Companies can leverage community-built foundations while maintaining the flexibility to address their unique requirements. As more companies hit the complexity ceiling of traditional billing solutions, this approach may become not just an alternative, but the standard for sophisticated billing infrastructure.
The message is clear: when billing becomes complex enough that engineers consider building it themselves, it’s complex enough to demand an open source solution.
That’s it for this week. Have a great weekend!
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