Minimums with overage - RevPro
How does RevPro handle Overages upon a monthly minimum.
- a) If the monthly minimum amount is greater than the sum of its associated usage lines, then the revenue recognized must be equal to the minimum amount
- b) If the monthly minimum amount is less than the sum of its associate usage lines, then the revenue recognized must be equal to the sum of the usage line with the difference spread proportionately across the usage lines
Please let us know how RevPro can handle this scenario.
Following is an example of scenario b:
Contract A is establish over a 12 month period with a minimum and 2 usage line items, and total contract value is $12000. The 2 usage line items are grouped under the minimum product.
During Month 1: Contract initiation
- Minimum Line is set upon booking; $1000 spread ratably over 12 months
- Usage Line 1 is set upon invoicing; $0 at inception
- Usage Line 2 is set upon invoicing; $0 at inception
During Month 2: The Usages get recorded and will be invoiced to the customer
- Usage Line 1 is invoiced for 600
- Usage Line 2 is invoice for 600
Expected Result: Total Revenue for month 2 must be recognized at $1200;
1)revenue for minimum = 1000
2) revenue for usage line 1 = 100
3) revenue for usage line 2 = 100