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Billing mechanics

Commitment

A contracted minimum spend over a term, usually in exchange for a lower rate.

A commitment is a promise to spend a minimum amount over a term, in return for better pricing. It is the standard enterprise shape for usage-based products.

Billing a commitment requires tracking consumption against it, charging the minimum whether or not it is consumed, applying overage rates beyond it, and deciding whether unused commitment rolls forward or is forfeited at term end.

The forfeiture question is commercial, not technical, and it should be on the order form rather than discovered in the billing system’s default behaviour.

Related terms

  • Drawdown Consuming a prepaid or committed balance, reducing it as usage is rated.
  • Overage Usage beyond an included allowance or commitment, charged at a separate rate.
  • Prepaid credits A balance a customer buys up front and draws down as they consume, sometimes at a discount to pay-as-you-go.
  • Usage-based pricing Charging by what the customer consumes rather than by a fixed subscription fee. Also called consumption or metered pricing.