True-Up

What is a true-up?

A true-up squares the books. You buy a certain amount up front, such as 50 seats or a set volume of usage. During the period, your real use drifts above that. At the end of the period, or at set points during it, the vendor counts what you used and bills you for the difference.

You will see two styles:

• Prorated true-up. Extra seats or usage are charged from the date they were added to the end of the term. Atlassian's Customer Agreement, for example, says if you exceed your purchased scope you must upgrade or pay for the extra, at its then-current rates, and the charges "may be prorated" for the rest of the term.
• Audit-based true-up. The vendor checks usage, often for software you run yourself, and invoices any excess. Atlassian's agreement says that for self-hosted software, "Atlassian may invoice for that excess use."

A true-up often runs one way. Unless your contract says otherwise, using less than you bought does not earn a refund.

Why it matters to you

• A surprise invoice. Seats added one by one through the year can turn into a large bill in one go.
• List price for the extra. If the contract charges then-current rates, added seats can cost more than your discounted ones.
• Your renewal baseline. A true-up can reset your count, so the next term starts at the higher number, and any renewal price increase applies to the larger total.

What to check

• When true-ups happen: monthly, quarterly, yearly or at renewal. Put the dates on your SaaS renewal calendar.
• What rate applies to the extra: your contract rate or list price.
• Whether removed seats or lower use offset added ones within the same period.
• How the vendor counts usage, and whether you can see the same numbers in the product.
• Whether true-ups are separate from overage charges, or the same thing under another name.

Minimum Commitment

A minimum commitment is a promise to spend at least a set amount, or use at least a set volume, over a period. In return, you may get a lower unit price. If your real use falls short, you still owe the minimum.

It is the other side of a true-up. A true-up charges you when you go over. A minimum commitment charges you when you come in under.

Watch whether the commitment can be cancelled. Our article DigitalOcean made spend commitments non-cancelable covers one such change. Under the new terms, a commitment cannot be canceled or reduced, and the unpaid rest becomes due at once if you cancel or the agreement ends.

Before you sign one, check:

• Whether unused commitment rolls over or is lost at the end of the period.
• Whether you can lower the commitment at renewal.
• Which products count toward it.
• Whether it can be cancelled if the vendor changes its terms or prices.

How Venpo helps

Venpo watches your vendors' terms and billing pages and emails you when they change, such as new rules for counting usage, true-up rates or non-cancelable commitments. The alert explains what changed and why it matters to your bill.