Commitments

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A plan can define a spending commitment, which sets a financial baseline for the services you offer. You can also override that commitment per customer when you create a subscription.

Minimum commitment

Guidelines

Besides spending minimums per charge, you can define minimum invoice totals. A minimum commitment makes a customer meet a minimum spend per billing period. It applies to the total spending in the billing period, including, if applicable, the subscription fee and all usage-based fees.

Commitment interval: The minimum commitment is aligned with the billing interval of the plan. For instance, if the plan is billed monthly, the minimum commitment is also established on a monthly basis;
Customizable commitments: When assigning a plan to a customer, you have the option to override the default commitment. This allows for customized minimum commitments per customer, accommodating negotiated contract terms; and
Arrears calculation: The commitment is calculated in arrears, meaning Lago waits until the end of the billing period to assess whether users have met their minimum spending commitment. This approach ensures accurate billing based on actual usage.

True-up fee

If the total spending falls below the minimum commitment at the end of the billing period, Lago will apply a true-up fee to adjust the invoice and meet the minimum spending requirement. Conversely, if spending exceeds the minimum commitment, Lago will generate an invoice for the actual consumption, without issuing a true-up fee.

The minimum commitment is calculated based on the pre-tax amount and before any discounts (such as coupons or credits) are applied.

Defining a minimum commitment

Dashboard
API

To create or update a minimum commitment from the user interface:

Open an existing plan, or create a new one;
Navigate below usage based charges;
Define a minimum commitment; and
Click “Add plan” to confirm.

Defining a minimum commitment on a plan in the Lago dashboard — Define a minimum commitment

The minimum commitment must follow the plan’s interval. You can add a specific tax rate for this minimum commitment.

{
    "plan": {
      "name": "Basic",
      "invoice_display_name": null,
      "created_at": "2024-02-23T16:01:04Z",
      "code": "basic",
      "interval": "monthly",
      "description": "",           
      "amount_cents": 10000,
      "pay_in_advance": true,
      "bill_charges_monthly": null,
      "customers_count": 2,
      "active_subscriptions_count": 2,
      "draft_invoices_count": 0,
      "parent_id": null,
      "minimum_commitment": {
        "plan_code": "basic",
        "invoice_display_name": "Minimum Contract Commitment",
        "amount_cents": 50000,
        "interval": "monthly",
        "taxes": []
        },
      "charges": [
          {
            "id": "ca205886-cf09-4e42-aed6-34cb2afd0c29",
            "billable_metric_id": "5b320600-715b-4ef5-88c1-4f88c0ec5c50",
            "invoice_display_name": "",
            "billable_metric_code": "storage",
            "created_at": "2024-02-23T16:01:04Z",
            "charge_model": "standard",
            "invoiceable": true,
            "pay_in_advance": false,
            "prorated": false,
            "properties": {
                "amount": "1"
            },
            "filters": [],
            "taxes": []
          },
          {
            "id": "1d5c78c6-0e22-424f-af8d-6784f6ff44ec",
            "billable_metric_id": "4cbc5940-32fb-48a8-aa39-ad664b34a062",
            "invoice_display_name": null,
            "billable_metric_code": "seats",
            "created_at": "2024-02-23T16:04:09Z",
            "charge_model": "standard",
            "invoiceable": true,
            "pay_in_advance": true,
            "prorated": false,
            "min_amount_cents": 0,
            "properties": {
                "amount": "7"
            },
            "filters": [],
            "taxes": []
          }
        ],
      "taxes": []
    }
}

Overwriting a minimum commitment

Dashboard
API

To overwrite the minimum commitment for a specific customer, follow these instructions:

Access a specific customer;
Choose to assign a new plan or edit an existing subscription; and
Override the default plan’s minimum commitment with a new value.

Overwriting the minimum commitment of a plan for one customer in the Lago dashboard — Overwriting a minimum commitment

    {
    "subscription": {
      "external_customer_id": "5eb02857-a71e-4ea2-bcf9-57d3a41bc6ba",
      "plan_code": "premium",
      "name": "Repository A",
      "external_id": "my_sub_1234567890",
      "billing_time": "anniversary",
      "subscription_at": "2022-08-08T00:00:00Z",
      "plan_overrides": {
        "amount_cents": 10000,
        "amount_currency": "USD",
        "description": "Plan for early stage startups.",
        "invoice_display_name": "Startup plan",
        "name": "Startup",
        "tax_codes": [],
        "minimum_commitment": {
          "plan_code": "basic",
          "invoice_display_name": "Minimum Contract Commitment",
          "amount_cents": 50000,
          "interval": "monthly",
          "taxes": []
        },
        "charges": []
      }
    }
}

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Resources

Commitments

Minimum commitment

Guidelines

True-up fee

Defining a minimum commitment

Overwriting a minimum commitment

​Minimum commitment

​Guidelines

​True-up fee

​Defining a minimum commitment

​Overwriting a minimum commitment

Minimum commitment

Guidelines

True-up fee

Defining a minimum commitment

Overwriting a minimum commitment