Pricing to Encourage Use

Railway explains the business philosophy behind their free plan and pricing model. Competing against hyperscalers offering massive free credits and well-funded startups running margin-negative compute, Railway chose a different path: building their own data centers and custom orchestrator to achieve positive gross margins while offering pay-only-for-what-you-use pricing. The goal is incentive alignment with customers — avoiding price hikes from subsidized compute or lock-in from large credit deals. This pricing power also enables revenue sharing with partners and $1M in payouts to open source template creators.