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If you are evaluating Usage.ai, the fee model is likely one of the first things you want to understand before moving forward.
Usage.ai does not follow a traditional flat subscription model in every commercial arrangement. For customers on a savings-based model, pricing is tied to the savings generated through commitments covered by the applicable agreement.
That makes one question especially important: How much economic value do you actually retain after the Usage.ai fee and any commitment underutilization are taken into account?
This guide walks through how Usage.ai calculates realized savings, applies its fee, treats existing commitments, and handles cashback so you can evaluate the economics more clearly.
The Usage.ai economics in one view
When evaluating commitment economics, it helps to keep four numbers separate instead of combining them into one headline savings percentage.On-Demand equivalent
What the applicable cloud usage would have cost at the relevant On-Demand rate.
Realized savings
The savings actually produced by the commitment rather than the amount originally forecast.
Usage.ai fee
The fee charged under the applicable commercial arrangement.
For customers on a savings-based model, this may be calculated against realized savings generated through commitments covered by that agreement.
Cashback
A separate rebate mechanism that may apply when an eligible Flex Commitment becomes economically underutilized, subject to the Flex Insured Commitment Program terms.
what the commitment actually saved,
what was paid to Usage.ai,
what financial value the customer retained, and
what downside protection may apply when usage changes.
How realized commitment savings work
A savings estimate is useful when deciding whether a commitment makes sense. Once that commitment is running, however, the more important number is what it actually saved.At a simplified level:
The exact calculation can vary by cloud provider and commitment type, so this should be treated as an economic framework rather than a universal accounting formula.
The key distinction is: Projected savings show the opportunity. Realized savings show the outcome.
Usage can grow, shrink, migrate, or disappear after a commitment is purchased. Those changes can affect utilization and the final economics.
How we calculate the Usage.ai fee
As already stated, Usage.ai supports commercial arrangements where fees are tied to cloud savings.For customers on a savings-based pricing model, the simplified calculation is:
Forecast savings help us evaluate whether a commitment opportunity makes sense. They are not automatically the amount against which a customer is billed.
The actual fee depends on the pricing terms in the customer’s Order and the savings covered by that commercial arrangement.
Our Terms of Service also allow for different fee structures depending on the applicable Order.
Example 1: What does the customer actually retain?
If the applicable realized savings for the month are $20,000 and the agreed fee is 20%, the Usage.ai fee would be:For Finance and FinOps teams, that retained savings figure is usually more useful than the headline discount alone.
What happens to commitments you already own?
Most teams already have commitments in place before they begin using or migrate to Usage.ai.That could include:
AWS Savings Plans
Reserved Instances
Azure Reservations
Google Cloud committed use discounts
Existing commitments
Commitments already owned before Usage.ai became involved.
New commitments managed through Usage.ai
New commitment purchases that fall within the Usage.ai management model.
Eligible Flex Commitments
Usage.ai-managed commitments that meet the requirements for protection under the Flex Insured Commitment Program.
When Usage.ai evaluates new commitment opportunities, it accounts for that existing portfolio rather than treating already-covered usage as though it were uncommitted.
Under the Flex Insured Commitment eligibility rules, eligible commitments must meet defined requirements, including being purchased through Usage.ai and designated as Flex-eligible at the time of purchase.
Our guide to how Usage.ai manages existing and new commitments explains how those layers fit together in practice.
For FinOps and Finance teams, the questions to clarify are:
Which commitments were already in place before Usage.ai?
Which new commitments will Usage.ai manage?
Which savings are included in the applicable fee calculation?
Which managed commitments qualify for Flex Commitment protection?
What happens when usage drops?
If usage falls after a commitment is purchased, the economics can change.The commitment itself may remain in place while less of it is utilized. That can reduce realized savings and create underutilization exposure.
This is the type of risk the Flex Insured Commitment Program is designed to address for eligible commitments.
For qualifying commitments, Usage.ai may provide cashback when the cost of the eligible commitment exceeds what the same applicable usage would have cost On-Demand.
Our program describes this benefit as a Non-Usage Rebate.
Cashback is not calculated from unused commitment percentage alone. The relevant downside is the amount by which the eligible commitment cost exceeds the applicable On-Demand-equivalent cost.
Example 2: A Flex Commitment becomes underutilized
Suppose an eligible Flex Commitment costs $10,000 for the month.Usage then falls, and the same applicable usage would have cost $8,500 On-Demand.
The economic downside is:
Under the current Flex Insured Commitment Program terms, the rebate calculation is based on the difference between the cost of the eligible Flex Commitment and what the same usage would have cost at the cloud provider’s applicable On-Demand rate for that month.
Whether the amount qualifies depends on the commitment continuing to meet the program’s requirements and exclusions.
Those requirements can include factors such as:
how the commitment was purchased,
remaining term,
how long it has been active, and
payment status.
How cashback is settled
Cashback is tracked separately from the savings generated by the cloud provider.It is not an additional AWS, Azure, or GCP discount. It is a separate rebate mechanism provided under the Flex Insured Commitment Program.
Under the current program terms, qualifying Non-Usage Rebates are assessed monthly and provided 90 days after the calendar month in which they accrued, following the settlement process defined in the terms.
Additionally, under the current terms, if the applicable agreement terminates, eligibility for Non-Usage Rebates ends, including for qualifying underutilization that may have occurred during the term.
That is worth understanding when evaluating migration or contract-exit economics.
Why savings and cashback should stay separate
A commitment portfolio can generate savings and downside at the same time.For example:
One Flex Commitment could generate $15,000 in realized savings.
Another could create $2,000 in qualifying downside because usage declined.
The first reflects savings generated through commitment pricing. The second reflects underutilization exposure that may qualify for cashback.
Combining them into one headline savings percentage will not help you understand what actually happened.
For FinOps and Finance teams, it is more useful to track:
realized commitment savings,
Usage.ai fees,
underutilization downside, and
eligible cashback
That gives you a clearer view of both the value generated by the commitment strategy and the risk that remained.
What should buyers compare?
A headline savings percentage should not be the only number you use when comparing commitment-management platforms.Two approaches can show similar projected savings and still produce materially different economics once fees, utilization, commitment ownership, and downside risk are taken into account.
A stronger comparison looks at six areas.
Realized savings
What did the commitments actually save after they were purchased?
Platform fees
What did you pay to generate, automate, or manage those savings?
Underutilization exposure
What happens financially if committed usage declines?
Downside protection
Does the platform absorb, rebate, or otherwise offset any portion of that exposure?
Commitment ownership and obligation
Where does the cloud commitment sit, and who remains responsible for the provider-side obligation if usage changes?
Exit economics
What happens to the commitments, fees, and any downside protection if the commercial relationship ends?
A platform with a lower management fee may still leave more commitment risk with the customer. Another approach may carry a higher fee while reducing part of the financial impact of underutilization.
Compare the economics in your own environment
The examples above can help you understand how Usage.ai pricing works, but your actual economics depend on your cloud spend, existing commitments, utilization, and the amount of eligible usage available to optimize.To see what those numbers could look like in your environment, you can start with the Usage.ai Savings Test.
It is a read-only evaluation of your current cloud environment that identifies potential commitment savings before you enable Usage.ai to make purchases.
See what happens during a Usage.ai Savings Test and how it works.
You can then compare the projected savings, expected Usage.ai fee, and resulting net economics with your current commitment strategy before deciding whether to move forward.
Get in touch with a FinOps expert to review your savings opportunity
Frequently asked questions
How does Usage.ai charge customers?
Usage.ai fees depend on the applicable Order or commercial agreement. For customers on a savings-based model, fees may be tied to realized savings generated through commitments covered by that arrangement.
Does Usage.ai charge based on projected savings?
Not necessarily. Projected savings help evaluate the opportunity. Under a savings-based commercial model, the applicable fee is tied to the savings covered by the customer's agreement rather than simply to the original forecast.
Does Usage.ai charge fees on commitments I already own?
Existing commitments are treated separately from new commitments managed through Usage.ai. The exact fee base depends on the customer's applicable commercial agreement, so buyers should confirm which commitments and savings are included.
What happens if a Flex Commitment becomes underutilized?
If an eligible Flex Commitment becomes economically underutilized, qualifying downside may generate cashback through a Non-Usage Rebate, subject to the Flex Commitment Program requirements and exclusions.
When is cashback paid?
Under the current program terms, qualifying rebates are assessed monthly and provided 90 days after the calendar month in which they accrued, following the settlement process defined in the Flex Commitment Program Terms.
