What is a usage true-up?

A true-up is the calculation at the end of a contract period that compares what a customer actually used with what their contract included, and bills the difference. For hybrid contracts that means applying included credits, any rollover from the previous period, free allowances and tiered overage rates in the order the contract specifies.

In what order are credits drawn down?

This calculator uses the most common order: free monthly allowance first, then rollover credits (oldest first, before they expire), then the period's included credits, then any grace allowance, and finally overage. Your contract may specify a different order.

Should overage tiers reset monthly or accumulate over the contract year?

It depends on the contract wording. If tiers accumulate across the true-up period, later usage reaches cheaper or more expensive tiers sooner. If they reset monthly, each month starts at tier one. The two methods can produce materially different invoices for the same usage.

How is a rollover cap calculated?

Most contracts cap rollover as a percentage of the period's included commitment, not of the unused balance. For example, a 20% cap on 40,000 included credits allows at most 8,000 credits to roll over, regardless of how many went unused.

Usage true-up calculator

Enter a contract's included credits, rollover terms and overage tiers, then the period's usage. The calculator shows what's owed, how every unit was drawn down, and how that compares with what you billed.

Commitment

Per true-up period. For an annual contract with quarterly true-ups, enter one quarter's allowance.

Included credits or units

Free units per month (optional)

Used before any drawdown.

Grace allowance (optional)

Absorbed after included credits, before overage.

Rollover Unused credits roll over

Rolled over from last period

Rollover cap

Of included credits.

Rollover expires after month

Leave blank if it lasts the whole period.

Overage tiers

Tiers accumulate over the period Tiers reset monthly

Tier	Up to (overage units)	Rate per unit	Remove

Leave the last tier's limit blank so it covers all remaining units.

Usage this period

Month by month One total

Months in period:

What was billed (optional)

Overage actually invoiced

Shows whether this period was under- or over-billed.

Month-by-month drawdown and pricing

Get the spreadsheet version

The same calculation as an Excel workbook with live formulas: inputs, a monthly ledger and tier pricing you can adapt to your own contracts.

Check every contract, not just one

Send 3–5 redacted contracts and a month of usage. Within 48 hours you get a line-by-line recalculation of each true-up against what was invoiced, with every line traced to its contract clause.

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How a usage true-up is calculated

A true-up compares what a customer used in a period with what the contract included, then prices the difference. With hybrid pricing the order of operations matters, because each source of credit has different rules.

Free allowance. Some contracts make the first units each month free. These never touch the commitment.
Rollover credits. Unused credits from the previous period, limited by the rollover cap and used before they expire.
Included credits. The current period's allowance, paid for by the commitment.
Grace allowance. A buffer some contracts allow before overage starts.
Overage. Everything left, priced through the overage tiers.

At the end of the period, unused included credits roll forward up to the cap. Unused rollover from the previous period usually expires.

Where true-ups usually go wrong

The rollover cap is applied to the wrong number

Caps are normally a percentage of the commitment. A 20% cap on 40,000 included credits allows 8,000 to roll over, however much went unused. Spreadsheets often apply the percentage to the unused balance instead, and the error compounds at every renewal.

Annual tiers reset every month

If tiers accumulate over the contract year, 8,000 overage units priced at $0.80 for the first 5,000 and $0.60 after cost $5,800. Reset the tiers each month and the same usage can bill $6,400. Use the tier switch above to see the difference on your own numbers.

An amendment never reaches the calculation

When a customer upgrades mid-term, the commit, the included credits and the rates all change from the effective date. Recalculate from that date with the new terms, and keep the old terms for the months before it. The amendment simulator shows the difference month by month.

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