diff --git a/usage/src/main/java/com/cloud/usage/parser/BackupUsageParser.java b/usage/src/main/java/com/cloud/usage/parser/BackupUsageParser.java
index bacf706cf179..531bc4bcd279 100644
--- a/usage/src/main/java/com/cloud/usage/parser/BackupUsageParser.java
+++ b/usage/src/main/java/com/cloud/usage/parser/BackupUsageParser.java
@@ -17,6 +17,7 @@
 
 package com.cloud.usage.parser;
 
+import java.text.DecimalFormat;
 import java.util.Date;
 import java.util.HashMap;
 import java.util.List;
@@ -25,6 +26,7 @@
 import javax.annotation.PostConstruct;
 import javax.inject.Inject;
 
+import com.cloud.utils.Pair;
 import org.apache.cloudstack.backup.Backup;
 import org.apache.cloudstack.usage.UsageTypes;
 import org.apache.log4j.Logger;
@@ -68,38 +70,91 @@ public static boolean parse(AccountVO account, Date startDate, Date endDate) {
             return true;
         }
 
-        final Map<Long, BackupInfo> vmUsageMap = new HashMap<>();
+        Map<String, Pair<Long, Long>> bkpUsageMap = new HashMap<String, Pair<Long, Long>>();
+        final Map<String, BackupInfo> vmUsageMap = new HashMap<>();
         for (final UsageBackupVO usageBackup : usageBackups) {
             final Long vmId = usageBackup.getVmId();
             final Long zoneId = usageBackup.getZoneId();
+            String key = vmId + "-" + usageBackup.getBackupOfferingId() + "-" + zoneId;
             final Long offeringId = usageBackup.getBackupOfferingId();
-            if (vmUsageMap.get(vmId) == null) {
-                vmUsageMap.put(vmId, new BackupUsageParser.BackupInfo(new Backup.Metric(0L, 0L), zoneId, vmId, offeringId));
+            if (vmUsageMap.get(key) == null) {
+                vmUsageMap.put(key, new BackupUsageParser.BackupInfo(new Backup.Metric(0L, 0L), zoneId, vmId, offeringId));
             }
-            final Backup.Metric metric = vmUsageMap.get(vmId).getMetric();
+            final Backup.Metric metric = vmUsageMap.get(key).getMetric();
             metric.setBackupSize(metric.getBackupSize() + usageBackup.getSize());
             metric.setDataSize(metric.getDataSize() + usageBackup.getProtectedSize());
+            long duration = getUsageDuration(usageBackup, startDate, endDate);
+            updateBackupUsageData(bkpUsageMap, key, vmId, duration);
         }
 
-        for (final BackupInfo backupInfo : vmUsageMap.values()) {
-            final Long vmId = backupInfo.getVmId();
-            final Long zoneId = backupInfo.getZoneId();
-            final Long offeringId = backupInfo.getOfferingId();
-            final Double rawUsage = (double) backupInfo.getMetric().getBackupSize();
-            final Double sizeGib = rawUsage / (1024.0 * 1024.0 * 1024.0);
-            final String description = String.format("Backup usage VM ID: %d", vmId);
-            final String usageDisplay = String.format("%.4f GiB", sizeGib);
-
-            final UsageVO usageRecord =
-                    new UsageVO(zoneId, account.getAccountId(), account.getDomainId(), description, usageDisplay,
-                            UsageTypes.BACKUP, rawUsage, vmId, null, offeringId, null, vmId,
-                            backupInfo.getMetric().getBackupSize(), backupInfo.getMetric().getDataSize(), startDate, endDate);
-            s_usageDao.persist(usageRecord);
+        for (String bkpIdKey : bkpUsageMap.keySet()) {
+            Pair<Long, Long> bkptimeInfo = bkpUsageMap.get(bkpIdKey);
+            long useTime = bkptimeInfo.second();
+
+            // Only create a usage record if we have a runningTime of bigger than zero.
+            if (useTime > 0L) {
+                BackupUsageParser.BackupInfo info = vmUsageMap.get(bkpIdKey);
+                createUsageRecord(UsageTypes.BACKUP, account, useTime, startDate, endDate, info);
+            }
         }
 
         return true;
     }
 
+    private static void createUsageRecord(int type, AccountVO account, long runningTime, Date startDate, Date endDate, BackupInfo backupInfo) {
+        // Our smallest increment is hourly for now
+        if (LOGGER.isDebugEnabled()) {
+            LOGGER.debug("Total running time " + runningTime + "ms");
+        }
+        final Long vmId = backupInfo.getVmId();
+        final Long zoneId = backupInfo.getZoneId();
+        final Long offeringId = backupInfo.getOfferingId();
+        float usage = runningTime / 1000f / 60f / 60f;
+
+        DecimalFormat dFormat = new DecimalFormat("#.######");
+        String usageDisplay = dFormat.format(usage);
+
+        final String description = String.format("Backup usage VM ID: %d", vmId);
+
+        final UsageVO usageRecord =
+                new UsageVO(zoneId, account.getAccountId(), account.getDomainId(), description, usageDisplay  + " Hrs",
+                        type, (double) usage, vmId, null, offeringId, null, vmId,
+                        backupInfo.getMetric().getBackupSize(), backupInfo.getMetric().getDataSize(), startDate, endDate);
+        s_usageDao.persist(usageRecord);
+    }
+
+    private static long getUsageDuration(UsageBackupVO usageBackup, Date startDate, Date endDate) {
+        Date backupCreateDate = usageBackup.getCreated();
+        Date backupDeleteDate = usageBackup.getRemoved();
+
+        if ((backupDeleteDate == null) || backupDeleteDate.after(endDate)) {
+            backupDeleteDate = endDate;
+        }
+
+        // clip the start date to the beginning of our aggregation range if the vm has been running for a while
+        if (backupCreateDate.before(startDate)) {
+            backupCreateDate = startDate;
+        }
+
+        if (backupCreateDate.after(endDate)) {
+            //Ignore records created after endDate
+            return 0L;
+        }
+        return  (backupDeleteDate.getTime() - backupCreateDate.getTime()) + 1; // make sure this is an inclusive check for milliseconds (i.e. use n - m + 1 to find total number of millis to charge)
+    }
+
+    private static void updateBackupUsageData(Map<String, Pair<Long, Long>> usageDataMap, String key, long vmId, long duration) {
+        Pair<Long, Long> backupUsageInfo = usageDataMap.get(key);
+        if (backupUsageInfo == null) {
+            backupUsageInfo = new Pair<Long, Long>(vmId, duration);
+        } else {
+            Long runningTime = backupUsageInfo.second();
+            runningTime = runningTime + duration;
+            backupUsageInfo = new Pair<Long, Long>(backupUsageInfo.first(), runningTime);
+        }
+        usageDataMap.put(key, backupUsageInfo);
+    }
+
     static class BackupInfo {
         Backup.Metric metric;
         Long zoneId;