Its good and they deserve credit for it. Let me be clear on that.

Now, wouldnt it be even better to implement usage based pricing with a maximum that's equal to the current subscription?

I dont know the Kagi details. Say you pay 10/month and each search is $0.02. You pay max(search_count * 0.02, 10).

I guess the logic is much simpler for their current system. It's 10/month, period. Then if you didnt search anything you get a refund. Instead of tracking and calculating usage.

However, usage pricing should be more enticing for casual users. With the statement refund for 0 use, there is now an incentive for infrequent users to NOT to use the product.