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Prepay vs Pay-As-You-Go Calculator

Is the prepaid plan actually cheaper? Compare it to pay-as-you-go and find the usage level where they tie.

How it is calculated

Total usage is monthly usage × plan months. Pay-as-you-go costs total usage × per-unit rate. The prepaid option costs the bundle price, plus overage on any units beyond the included allowance (extra units × overage rate), plus an opportunity cost: the growth you would have earned on the cash paid up front, price × ((1 + annual rate)months ÷ 12 − 1). The cheaper option and the saving are shown. Break-even usage is the monthly usage at which both cost the same, using the fixed part (price + opportunity cost); it is shown as "No break-even" if the overage rate is not below the pay-as-you-go rate and the allowance would be exceeded. The effective unit price is the prepaid total divided by total usage. Unused allowance is assumed to be lost, not rolled over.

Worked example

A plan costs 300 for 12 months and includes 1200 units; the overage rate is 0.30. Pay-as-you-go is 0.35 per unit. Expected usage is 90 units a month, and you could earn 4% a year on the cash. Total usage is 90 × 12 = 1,080 units, inside the allowance, so overage is $0.00. Pay-as-you-go costs 1080 × 0.35 = $378.00. The prepaid plan costs 300 plus an opportunity cost of $12.00, which is $312.00. Prepay is cheaper by $66.00. Break-even is 312 ÷ (12 × 0.35) = 74.29 units a month.

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Common mistakes

  • Entering the monthly allowance in the included-units field: it expects the total for the whole plan, so 100 a month for 12 months must be 1200.
  • Entering monthly usage as a yearly figure: usage is per month and is multiplied by the plan months.
  • Leaving the opportunity rate at 0 although the cash could earn interest elsewhere, which makes the prepaid plan look cheaper than it is.
  • Assuming unused units carry over: the tool counts only what you use, and an unused allowance is simply wasted money.
  • Expecting a break-even when the overage rate is not below the pay-as-you-go rate: if the break-even point would lie beyond the allowance, the tool answers "No break-even".

About this calculator

A prepaid plan trades a lump-sum or subscription commitment for a lower unit price, while pay-as-you-go keeps every unit priced individually but with no upfront exposure. The comparison boils down to a single break-even usage level: below it, the per-unit plan costs less because the fixed price of the bundle goes unused; above it, the prepaid bundle wins because its lower effective rate spreads over more units.

This kind of decision comes up whenever a provider offers a bundle-versus-metered choice — phone or data plans, gym memberships versus day passes, transit passes versus single tickets, or subscription credits versus on-demand purchases. The right call depends not just on average usage but on how much cash you can tie up in the bundle, whether unused allowance rolls over or is lost, and how confident you are in your usage forecast; overestimating usage under a prepaid plan wastes the unused allowance, while underestimating usage under pay-as-you-go leaves you paying more per unit than a bundle would have delivered.

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