A true-up and a true-down move quantity in opposite directions. A true-up bills what you deployed above the baseline. A true-down is a clause that lets the committed quantity fall.
Standard paper does the first. The second is negotiated, and it is uncommon. The license true-down page puts a true-down clause in 12 to 18 percent of the negotiated renewals it covers, with a workable shape of a 10 to 25 percent reduction, 60 to 90 days' notice, and the original unit price kept on the reduced quantity.
How a true-up bills#
The true-up page describes the usual shape. A baseline is set at signature. During the year, deployment can run above it. At the anniversary, the excess is invoiced. Deployment that spiked and came back down before the anniversary often misses the measurement. Deployment that sits below the baseline is not refunded. The unit price on the added quantity is commonly the original contract price, and the new higher quantity becomes the next baseline.
That asymmetry is why the baseline at signature is the expensive line. A high baseline is prepaid shelfware. A low baseline becomes a series of anniversary invoices. The true-up cost benchmark is the library's longer note. Microsoft Enterprise Agreement, Adobe ETLA, and Cisco enterprise agreements are the contracts the true-up page names as standard homes for this clause.
How a true-down is written#
A true-down has to say four things or it does not work: how much quantity can come off, when, how much notice, and whether the unit price on what remains stays put. A right that exists only if the vendor agrees later is a conversation, and the clause is missing.
Vendors resist it because a reduction cuts the forward booking. The true-down page names the moments it shows up: a credible alternative, a consolidation that grows the rest of the deal, or a renewal where the installed base has already shrunk. Oracle and SAP sit at the low end of that page's prevalence notes. Microsoft EA renewals sit higher.
Renewal is where they meet#
At renewal, unused baseline wants to come off, and growth wants a new baseline. Shelfware at a software renewal is the measurement. SaaS renewal price increase is the price change on whatever quantity survives. Cloud commits are a different instrument: unused AWS or Azure commit is a consumption shortfall, covered under commitment structures, and it does not use a license true-down.
Frequently asked questions
- What is a software true-up?
- A true-up reconciles deployed quantity to the contract baseline, usually once a year. Quantity above the baseline is billed. Quantity below the baseline is still paid.
- What is a license true-down?
- A true-down is a contractual right to reduce committed quantity at renewal or mid-term. The true-down page describes a workable version as a defined percent reduction, written notice, and the original unit price kept on what remains.
- Do true-up and renewal uplift bill the same thing?
- No. A true-up bills added quantity. Renewal uplift raises the price on quantity you already have.