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Commitments and Ramp Up Periods

Last Updated: Aug 28, 2020

Commitments can be set up on contracts and defined based on the commitment types listed in the table below.

Commitment Type

Description

Service

Commitment based on service volume. This service can be in any package. (e.g. Volume commitment on subscription A, where subscription A can be in any product offering on that account)

Usage

Commitment based on a usage class (e.g. Commitment on 1,000 monthly API calls)

Package Service

Commitment based on a service within a specific package and package frequency (e.g. Volume Commitment on subscription A where subscription A is in a monthly instantiation of Package A)

Package

Commitment based on package volume (e.g. Volume commitment on Package A)

Invoice Amount

A commitment based on how much was billed on that invoice (e.g. Invoiced level commitment where total invoiced amount must be X dollars.)

Average Usage Charge

Average usage per service connection (e.g. Enforce an average usage of 100 API calls across a set of subscriptions. Subscription A could use 80 API calls and Subscription B could use 20 API calls. As long as the average works out to 100, the commitment terms are met.)

For each commitment, it will be possible to setup a Commitment Period, the Committed amount and Commit Frequency. The commitment period indicates the length of the commitment (for instance a 3-month commitment), the commit amount indicates the amount that is being committed per Commit Frequency.

Ramp Up Periods

Ramp up schedules can be set up on commitments. Ramp up schedules are based on product volumes, invoiced amounts or on usage. As an example, a customer might enforce a minimum commitment of £10,000 per month for 4 months, followed by a ramp up to £20,000 per month for the next 4 months followed by £30,000 per month for the remainder of the term.

A usage based schedule enforces commitments based on usage; 1 TB monthly for months 1-3 followed by 2 TB monthly for months 4-6 and 3 TB per month thereafter.

Penalties can be imposed if the commitment terms were not reached. Two types of penalties can be configured:

  • Charge: This is a minimum commit charge (in pounds, dollars ...) that will be imposed. For instance, a $5000 charge can be set - the minimum amount charged to that contract will always be 5000 or greater.

  • Count: A per unit charge imposed on under commitments. A minimum commit is specified and amounts lower than the minimum charge are subject to this penalty.

Tiered penalties can also be charged to handle thresholds on commitment underuse. There is no limit to the number of tiers that can be set up.