<p>I am trying to use the Recurring payment API offered by PayPal.
I have a scenario which I am not able to address directly. It goes like this.</p>

<p>We have a website where we sell some services. Now the services are charged per user license. A user can buy/cancel user license in between. We want to offer the customer a recurring billing option. We have to notice here that the amount may vary each billing cycle based on the number of user licenses the customer uses during that cycle.</p>

<p>Is there any way I can achieve this using PayPal recurring Payment API's.</p>

The recurring payment option is a fixed amount that the customer pre-agrees to pay each month (or period).  To do what you're trying to do, a customer would have to pre-agree to pay whatever amount you decide to charge at a later time.  This means pre-authorizing an unknown payment amount, which will not be allowed by any payment service.
Your only options are:
Bill the variable amount each month (i.e. no subscription).
Set up a subscription where the monthly amount is the maximum that could potentially be billed, and then refund the difference each month.
Good luck with #2 - I would never agree to such a thing as a customer, personally.