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| # Commitment Discounts | ||
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| A commitment discount is a billing discount that offers reduced rates on preselected SKUs in exchange for an obligated usage or spend amount over a predefined term. Within cost and usage datasets, commitment discounts typically consist of a set of purchases and usage records. | ||
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| ## Purchases | ||
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| While customers are bound to the term of a commitment discount, cloud-service providers, or CSPs, offer various payment options before and/or during the term: | ||
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| * In-Advance - The commitment discount is paid in full before the term begins | ||
| * Monthly - The commitment discount is paid monthly over the term. | ||
| * Hybrid (In-Advance & Monthly) - Half of the commitment discount is paid in-advance and half is paid monthly over the term. | ||
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| For example, if a customer buys a spend-based commitment discount for 1 year, with a $1 hourly commitment, and pays with the hybrid option, their purchase schedule is: | ||
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| * In-Advance: $4,380 (24 hours * 365 days * $1 * 0.5) | ||
| * Monthly: $182.50 (24 hours * 365 days * $1 / 12 months) | ||
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| ## Usage | ||
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| Commitment discounts follow a "use-it-or-lose-it" model where the amortization of a commitment discount's purchase applies evenly over each charge period (typically hourly) over the term. | ||
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| For example, if a customer buys a spend-based commitment with a $1 hourly commitment in January (31 days), only $1 is eligible for amortization for each hourly charge period. This means that if I have eligible resources running during this charge period, some or all of the $1 allocated to the charge period will be also be allocated to one or more resources. Conversely, if I don't have eligible resources running during this charge period, the $1 allocated to the charge period is wasted. | ||
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| # Commitment Discounts in FOCUS | ||
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| Within the FOCUS specification, the following examples demonstrate how a commitment discount would appear across various payment and amortization scenarios. | ||
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| ## Purchases | ||
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| All commitment discount purchases appear with a positive `BilledCost`, `PricingCategory:Committed`, and the commitment discount's id as both the `ResourceId` and `CommitmentDiscountId` value. In-advance purchases appear as a single record also with `ChargeCategory:Purchase`, `ChargeFrequency:One-Time`, and the commitment discount's entire purchased quantity, `CommitmentDiscountPurchasedQuantity`, and units, `CommitmentDiscountUnit` for the term. | ||
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| Monthly purchases are spread across all corresponding charge periods of the term also with `ChargeCateogry:Purchase`, `ChargeFrequency:One-Time`, and the commitment discount's purchase quantity, `CommitmentDiscountPurchasedQuantity`, and units, `CommitmentDiscountUnit` for the charge period. | ||
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| Using the same example as above, various purchase for a one-year, spend-based commitment discount with a $1 hourly commitment purchased on Jan 1, 2023 can be seen as: | ||
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| ### In-Advance | ||
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| The entire commitment is billed _once_ during the first charge period of the term for $8,670 (24 hours * 365 days * $1). | ||
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| *Charge Period: 2023-01-01 00:00:00 - 2023-01-01 01:00:00* | ||
| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2024-01-01 00:00:00Z", | ||
| "ChargeCategory": "Purchase", | ||
| "ChargeFrequency": "One-Time", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<commitment-discount-id>", | ||
| "BilledCost": 8760.00, | ||
| "EffectiveCost": 0.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountPurchasedQuantity": 8760.00, | ||
| "CommitmentDiscountUnit": "USD" | ||
| } | ||
| ] | ||
| ``` | ||
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| ### Monthly | ||
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| The commitment is billed across all 8,760 charge periods of the term with $1 allocated to each charge period over the term. | ||
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| *Charge Period: 2023-01-01 00:00:00 - 2023-01-01 01:00:00* | ||
| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Purchase", | ||
| "ChargeFrequency": "Recurring", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<commitment-discount-id>", | ||
| "BilledCost": 1.00, | ||
| "EffectiveCost": 0.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountPurchasedQuantity": 1.00, | ||
| "CommitmentDiscountUnit": "USD" | ||
| }, | ||
| ... more recurring purchase records ... | ||
| ] | ||
| ``` | ||
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| ### Hybrid (In-Advance & Monthly) | ||
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| Half of the commitment is billed _once_ during the first charge period of the term _and_ the other half is billed across each charge period over the term. Amortized costs incur half of the amount (i.e. $0.50) from the in-advance purchase and the other half from monthly purchase. | ||
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| *Charge Period: 2023-01-01 00:00:00 - 2023-01-01 01:00:00* | ||
| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2024-01-01 00:00:00Z", | ||
| "ChargeCategory": "Purchase", | ||
| "ChargeFrequency": "One-Time", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<commitment-discount-id>", | ||
| "BilledCost": 1.00, | ||
| "EffectiveCost": 0.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountPurchasedQuantity": 4380.00, | ||
| "CommitmentDiscountUnit": "USD" | ||
| }, | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Purchase", | ||
| "ChargeFrequency": "Recurring", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<commitment-discount-id>", | ||
| "BilledCost": 0.50, | ||
| "EffectiveCost": 0.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountPurchasedQuantity": 0.50, | ||
| "CommitmentDiscountUnit": "USD" | ||
| }, | ||
| ... more recurring purchase records ... | ||
| ] | ||
| ``` | ||
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| ## Usage | ||
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| Amortization of commitment discounts occur the same way no matter how a purchase(s) are made. The same fixed usage-based or spend-based amount is applied evenly across all charge periods to eligible resources. Continuing with the same one-year, spend-based commitment discount with a $1 hourly commitment as above, there are 4 possible types of scenarios that can occur with eligible resource(s) during a charge period: | ||
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| * Scenario 1: 1 resource runs for $1 (100% utilization). | ||
| * Scenario 2: No eligible resources run (0% utilization). | ||
| * Scenario 3: 1 resource runs for $0.75 (75% utilization). | ||
| * Scenario 4: 1 resource runs for over the $1 hourly commitment (100% utilization + overage). | ||
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| ### Scenario 1: 1 resource runs for $1 (100% utilization). | ||
| In this scenario, the entire, eligible amount was allocated to a resource and no portion of the amoutn was unused. | ||
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| *Charge Period: 2023-01-01 00:00:00 - 2023-01-01 01:00:00* | ||
| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Usage", | ||
| "ChargeFrequency": "Usage-Based", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<resource-id>", | ||
| "ConsumedQuantity": 1, | ||
| "ConsumedUnit": "Hour" | ||
| "BilledCost": 0.00, | ||
| "EffectiveCost": 1.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountStatus": "Used", | ||
| "CommitmentDiscountConsumedQuantity": 1.00, | ||
| "CommitmentDiscountUnit": "USD" | ||
| } | ||
| ] | ||
| ``` | ||
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| ### Scenario 2: No eligible resources run (0% utilization). | ||
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| In this scenario, the entire, eligible amount was unused and remained allocated to the commitment discount. | ||
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| *Charge Period: 2023-01-01 00:00:00 - 2023-01-01 01:00:00* | ||
| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Usage", | ||
| "ChargeFrequency": "Usage-Based", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<commitment-discount-id>", | ||
| "ConsumedQuantity": null, | ||
| "ConsumedUnit": null, | ||
| "BilledCost": 0.00, | ||
| "EffectiveCost": 1.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountStatus": "Unused", | ||
| "CommitmentDiscountConsumedQuantity": 1.00, | ||
| "CommitmentDiscountUnit": "USD" | ||
| } | ||
| ] | ||
| ``` | ||
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| ### Scenario 3: 1 resource runs for $0.75 (75% utilization). | ||
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| In this scenario, one resource runs for the full hour, costs $0.75, and leaves $0.25 as unused. | ||
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| *Charge Period: 2023-01-01 00:00:00 - 2023-01-01 01:00:00* | ||
| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Usage", | ||
| "ChargeFrequency": "Usage-Based", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<resource-id>", | ||
| "ConsumedQuantity": 1, | ||
| "ConsumedUnit": "Hour", | ||
| "BilledCost": 0.00, | ||
| "EffectiveCost": 0.75, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountStatus": "Used", | ||
| "CommitmentDiscountConsumedQuantity": 0.75, | ||
| "CommitmentDiscountUnit": "USD" | ||
| }, | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Usage", | ||
| "ChargeFrequency": "Usage-Based", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<commitment-discount-id>", | ||
| "ConsumedQuantity": null, | ||
| "ConsumedUnit": null, | ||
| "BilledCost": 0.00, | ||
| "EffectiveCost": 0.25, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountStatus": "Unused", | ||
| "CommitmentDiscountConsumedQuantity": 0.25, | ||
| "CommitmentDiscountUnit": "USD" | ||
| } | ||
| ] | ||
| ``` | ||
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| ### Scenario 4: 1 resource runs for over the $1 hourly commitment (100% utilization + overage). | ||
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| ``` | ||
| [ | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Usage", | ||
| "ChargeFrequency": "Usage-Based", | ||
| "PricingCategory": "Committed", | ||
| "ResourceId": "<resource-id>", | ||
| "ConsumedQuantity": 1, | ||
| "ConsumedUnit": "Hour", | ||
| "BilledCost": 0.00, | ||
| "EffectiveCost": 1.00, | ||
| "CommitmentDiscountId": "<commitment-discount-id>", | ||
| "CommitmentDiscountStatus": "Used", | ||
| "CommitmentDiscountConsumedQuantity": 1.00, | ||
| "CommitmentDiscountUnit": "USD" | ||
| }, | ||
| { | ||
| "BillingPeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "BillingPeriodEndDate": "2023-02-01 00:00:00Z", | ||
| "ChargePeriodStartDate": "2023-01-01 00:00:00Z", | ||
| "ChargePeriodEndDate": "2023-01-01 01:00:00Z", | ||
| "ChargeCategory": "Usage", | ||
| "ChargeFrequency": "Usage-Based", | ||
| "PricingCategory": "Standard", | ||
| "ResourceId": "<resource-id>", | ||
| "ConsumedQuantity": 1, | ||
| "ConsumedUnit": "Hour", | ||
| "BilledCost": 0.50, | ||
| "EffectiveCost": 0.00 | ||
| } | ||
| ] | ||
| ``` | ||
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