A minimum commitment sets a floor: you agree to pay for a certain volume — seats, transactions, spend — whether or not you use it. A true-up is the settlement at the end of a period, where the vendor tallies your actual usage and bills you for anything over the committed amount.
For an owner-operator, two things bite. First, an over-sized minimum means paying for capacity you never touch — pure waste if your usage is below the floor. Second, a true-up can produce a surprise bill if usage spiked and the per-unit overage rate is high.
Right-size the commitment to realistic usage, not the vendor's optimistic forecast. Negotiate the overage rate, ask whether unused commitment rolls over, and confirm how and when the true-up is calculated so there are no year-end surprises.
"Customer commits to a minimum annual volume of 100,000 transactions; usage above the commitment is billed quarterly at $0.12 per transaction."
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