Commitment

Commitment-based pricing is a billing model that lets customers commit to a minimum spend or quantity for each billing period. It gives the business predictable revenue and lets the customer pay for actual usage beyond the commitment at a defined overage rate. A commitment is configured on a subscription line item and, by default, applies across the entire billing period. To vary the commitment by time of day — for example, higher rates during business hours and lower rates overnight — use time-of-day buckets.

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How Commitment Works

When a commitment is configured on a subscription line item:

1. Commitment amount — The minimum the customer commits to per billing period (e.g. $1,000/month). This guarantees the revenue floor.
2. Overage factor — A multiplier applied to usage cost above the commitment (e.g. 1.5x). When usage exceeds the commitment, the excess is billed at the overage rate.
3. Usage calculation:
   • If total usage cost ≤ commitment: all usage is charged at the base rate.
   • If total usage cost > commitment: the commitment portion is charged at the base rate, and the excess is charged at base_rate × overage_factor.

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Steps to Add a Commitment

1. Click Add Subscription.
2. Scroll to the Commitment & Overage section.
3. Set the commitment amount and overage factor.

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Understanding True-Up

True-up ensures the customer pays the full commitment even when actual usage falls short. When true-up is enabled and usage at period end is below the commitment, the shortfall is billed as a separate true-up line item.

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How True-Up Works

1. During the billing period — Flexprice tracks usage and computes the running usage cost.
2. At invoice generation:
   • Usage cost < commitment AND true-up enabled → a true-up line item is added for the shortfall.
   • Usage cost ≥ commitment → standard commitment-and-overage logic applies; no true-up is needed.

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Steps to Add True-Up

1. Click Add Subscription.
2. Scroll to the Commitment & Overage section.
3. Set the commitment amount and overage factor.
4. Enable true-up using the toggle.

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Time-of-Day Commitment Buckets

A line-item commitment applies for all 24 hours of the day. If you need different commitments and prices for different parts of the day — for example, reserved capacity 09:00–17:00 UTC and standard pricing outside — configure time-of-day buckets on the line item.