Minimum Commitment Products

A minimum commitment is a promise to spend at least a set amount on usage in each billing period, for example $1,000 a month on API calls. If usage falls short, the customer pays the difference. If usage goes over, they pay for what they used.

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How minimum commitments work

Explanation

Only usage charges count towards the commitment. Subscription, one-time and other charges never count. On the rate you choose which usage products count, and whether the commitment is billed in arrears or in advance.

Billed in arrears (default)

The commitment is checked when usage is billed, at the end of the period:

1. Usage for the period is calculated.
2. MonetizeNow adds up the usage that counts towards the commitment.
3. If that total is less than the commitment, a minimum commitment line is added for the difference. If it's equal or more, nothing is added.

Example: a $1,000 commitment and $900 of API usage.

With $1,000 or more of usage, there'd be no commitment line.

Billed in advance

The full commitment is invoiced at the start of each period. As usage is billed during the period, a negative commitment line offsets it, up to whatever is left of the commitment. The customer pays the greater of the commitment or their usage, never both.

Example: usage below the commitment ($1,000 commitment, $800 of usage)

The customer pays $1,000 in total: the commitment.

Example: usage above the commitment ($1,000 commitment, $1,400 of usage)

The customer pays $1,400 in total: their actual usage.

The commitment lines use your minimum commit product's name and description.

Tax: minimum commitment lines aren't taxed. Tax applies to the usage itself, on the usage lines.

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Set up a minimum commitment

How-to. Requires Tenant Admin or Billing Admin.

1. Create the product. In Product Catalog → Products, create a product with Product Type Minimum Commit.

2. Create the offering. Create an offering with Offering Type Minimum Commit and add the minimum commit product. A Minimum Commit offering holds exactly one product: the minimum commit product. The usage products it covers are sold in their own offering.

3. Add a rate. On the rate, set:

   Field	Options
   Minimum Commit Frequency	How often the commitment applies. Monthly by default. It must match the billing frequency of the usage it covers.
   Minimum Commit Timing	Arrears (default) or Advance
   Apply To	All Usage Products (default), Specific Usage Products or All Except Specific Usage Products. Pick the products in Products when needed.
   Price	Set and locked for you: Volume pricing, one tier from 0 with no upper limit, amount 1

4. Save the offering.

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Quote a minimum commitment

How-to

1. Add the usage offering and the minimum commitment offering to the quote.
2. On the minimum commitment line, enter the commitment amount as the quantity. The price per unit is 1, so a quantity of 1000 on a USD rate means a $1,000 commitment.
3. Send and process the quote as usual.

A quote can include only one minimum commitment offering, because its scope applies to all usage on the quote.

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Rules and limits

Reference

Related

• Billing for Usage
• Prepaid Credits
• Products