Billing Commitment Clause Samples
A Billing Commitment clause establishes the obligation of one party, typically the customer, to pay for a specified minimum amount of goods or services over a defined period. This clause may require the customer to pay a set fee regardless of actual usage, or to meet a minimum purchase threshold, with any shortfall potentially billed at the end of the period. Its core practical function is to provide the service provider or seller with predictable revenue and to allocate the risk of underutilization to the customer, ensuring financial stability for the provider.
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Billing Commitment. During the Initial Term, Reseller must meet the following Billing Commitment to SFDC (“Billing Commitment”): [*] In order to determine whether the Billing Commitment has been met, the parties will calculate the aggregate amounts owed SFDC for (i) [*] (“Actual Billing Amount”). If, at the end of the Initial Term, Reseller has failed to meet the Billing Commitment, [*], Reseller shall pay to SFDC an amount equal to the difference between the Billing Commitment and the Actual Billing Amount (the “Shortfall Payment”); provided, however, that if the Parties are in a dispute referred to in Section 5.1, 5.2, or 5.3 hereof that affects the amount of such Shortfall Payment, any portion of such Shortfall Payment affected by such dispute (and only such affected portion) shall not be due until such dispute is resolved, and then only as provided in the applicable Section.