AI Agent Renewal And True Up

AI-Agent Renewal and True-Up

Acknowledgement: Shared by Peter Bamuhigire, techguypeter.com, +256 784 464178.

Use When

• The engagement has a multi-year horizon and the renewal mechanics must be drafted now.
• The agent's autonomy ramp is expected to change the price (price-step at each autonomy level achieved).
• Volume is uncertain and true-up is required.
• The buyer's procurement team has signalled the renewal clause is a deal-blocker if not pre-agreed.
• The model-provider price and FX are volatile and the renewal must index against them.

Do Not Use When

• The engagement is a one-off fixed-fee build with no recurring component.
• The engagement is month-to-month with no renewal commitment.

Domain Inputs

• The base term, the renewal term, and the notice period.
• The autonomy ramp curve with named milestones and price-steps.
• The volume baseline and the true-up direction (over / under / both).
• The model-provider price-index source and FX reference rate.
• The CPI source (where indexed pricing applies).
• The ramp-down protection the buyer expects.
• The agency's renewal posture (auto vs express).

Domain Method

1. Set the base term (typically 12 / 24 / 36 months) and the renewal term (typically annual).
2. Decide auto-renewal vs express-renewal — auto with 90-day notice is the default; regulated buyers often require express renewal.
3. Write the true-up clause for volume — at the end of each quarter or annum, observed volume is reconciled against the included volume; overage is billed; under-use does not refund (the buyer pre-committed to the included volume).
4. Write the autonomy-progression price-step — the price changes when the agent crosses a named autonomy threshold (e.g. intervention rate sustained below 8 % for three months → next pricing tier; sustained above 15 % for three months → previous pricing tier).
5. Write the ramp-down protection — the buyer's right to reduce included volume by a defined percentage at renewal (typically up to 15 %) without re-priced base.
6. Write the index-linked renewal — annual price reset capped at CPI + N % or model-provider-price-index + N %, with a margin floor and a buyer protection floor.
7. Write the FX corridor — the price denomination, the reference rate, and the corridor (typically 15 %) outside which a commercial review is triggered.
8. Output the Renewal Exhibit for the MSA.

The Renewal Mechanics

Auto-Renewal vs Express-Renewal

• Auto-renewal with 90-day non-renewal notice is the default for non-regulated buyers; protects revenue continuity.
• Express renewal with a 60-day pre-renewal review window is the default for regulated buyers and public sector; protects against governance failures.
• A hybrid is available: auto-renewal with a mandatory pre-renewal review at month 10 (of a 12-month base), with named topics — autonomy progression, SLA performance, credit and refund history, model-provider posture, FX movement, regulatory environment.

True-Up Clause

At the end of each True-Up Period (typically quarterly for high-volume engagements, annual for stable engagements):

• Overage — volume above included is billed at the overage rate.
• Under-use — volume below included does not refund (the buyer pre-committed); a portion of the under-use (typically up to 25 %) may roll forward into the next period at the agency's discretion.
• Material divergence — observed volume diverges from forecast by more than 30 % over two consecutive periods triggers a commercial review.

Autonomy-Progression Price-Step

The agent's autonomy progression changes the price:

• Crossing the next autonomy tier (e.g. intervention rate sustained ≤ 8 % for three months) → price moves to the next tier (better unit economics for the buyer).
• Slipping below the previous autonomy tier (e.g. intervention rate sustained ≥ 15 % for three months) → price moves to the previous tier (more supervisor cost recovered).
• The price-step protects both sides — the buyer is not paying mature-agent prices for an immature agent, and the agency is not absorbing supervisor cost on a regressing agent.

Ramp-Down Protection

At renewal, the buyer may reduce included volume by up to R % (typically 15 %) without re-priced base. Beyond R %, the agency re-prices the base to reflect the reduced cost recovery. The buyer may not reduce the SLA class without re-priced base.

Index-Linked Renewal

The annual price reset is capped at the lower of:

• CPI + N % (typically CPI + 3 %), and
• Model-provider-price-index + M % (typically model-index + 2 %), with a margin floor for the agency (the agency does not absorb a model-price hike that would breach its floor) and a buyer protection floor (the agency does not raise prices in a low-CPI year by stacking indices).

FX Corridor

Where the buyer's fees are in local currency (KES, NGN, UGX, RWF, ZAR) and the model costs are in USD:

• Reference rate is the named index (central bank reference rate) on the last business day of the month preceding the invoice month.
• A 15 % corridor against the rate at the Effective Date over any rolling 12-month period triggers a commercial review.
• The agency does not absorb sustained FX shocks beyond the corridor.

Quality Standards

• Auto-renewal posture is explicit (auto vs express vs hybrid).
• True-up direction is named (both over and under).
• Autonomy price-step has named thresholds and a sustained-observation window.
• Ramp-down protection has a named percentage.
• Index-linked renewal names both CPI and model-provider-price-index, with caps and floors.
• FX corridor is named with reference rate and percentage.
• Renewal exhibit is internally consistent with the pricing exhibit and the SLA exhibit.

Domain Risks

• Auto-renewal hidden in fine print at the end of the contract.
• True-up that refunds under-use — the agency absorbs the under-commitment.
• Autonomy price-step undefined — the buyer keeps paying immature-agent prices forever, or vice versa.
• Ramp-down without a percentage — the buyer collapses volume at renewal and the agency cannot recover cost.
• Index-linked renewal with no floor — the agency absorbs FX or model-price shocks.
• FX corridor absent in an Africa-context engagement.
• "Subject to annual review" — procurement reads this as no commitment.

Domain Outputs

• Renewal Exhibit (drop-in).
• True-Up Schedule.
• Autonomy-Progression Price-Step Schedule.
• Ramp-Down Protection Clause.
• Index-Linked Renewal Clause.
• FX Corridor Clause.

Anti-Patterns

• Quoting an unverified commercial term. Fix: trace it to the approved brief or contract record and label any unresolved variable.
• Billing an attempted task as a completed outcome. Fix: define the eligible event, exclusions, reversal window, and evidence source.
• Leaving credits, refunds, or liability uncapped. Fix: state the eligible fee base, cap, trigger, exclusions, and approval owner.
• Updating one exhibit while dependent terms still conflict. Fix: reconcile pricing, SLA, credit, refund, renewal, and liability provisions together.
• Removing a legal placeholder without authority. Fix: retain the marker, name the decision owner, and require qualified review before issue.

Inputs

Outputs

Evidence Produced

Capability Contract

Minimum capability is read access to the approved commercial record and calculation support for any stated formula. Drafting authority permits edits only inside the requested proposal or contract working copy. Do not sign, publish, spend, change production configuration, concede liability, or represent legal approval without explicit authority. Legal and tax conclusions require qualified review.

Degraded Mode

Fallback when tools are unavailable: use the qualified path below.

If source terms, telemetry, calculation tools, or legal review are unavailable, return the narrowest useful marked draft: identify unverified variables, preserve placeholders, show the calculation method where possible, and mark each unavailable check as not assessed. Never convert missing evidence into approval.

Decision Rules

Workflow

1. Confirm the consumer, authority, controlling commercial record, and required inputs; stop when a baseline or accountable owner is missing.
2. Reproduce relevant calculations and identify conflicts across pricing, SLA, credit, refund, renewal, liability, and scope; stop when a formula cannot be reproduced.
3. Apply the domain method and decision rules within delegated authority, recording assumptions and exclusions.
4. Draft the contracted output and cross-check every dependent exhibit; recover by reconciling the controlling term with its owner and rerunning the calculation.
5. Verify acceptance conditions, evidence trace, legal-review markers, and anti-slop controls; block release until failed checks are corrected.

Worked Example

Actual volume is 30% above the contracted band and autonomy advanced one stage. Calculate the contractual true-up, show the next-period band, and apply only the agreed index.

References

• ai-agent-renewal-and-true-up-clauses — drop-in language.
• ai-agent-vendor-cost-pass-through — model-provider price-index handling.
• ai-agent-pricing-exhibit-template — pricing exhibit consistency.
• ai-agent-pricing-and-packaging-proposal — pricing patterns.
• ai-agent-commercial-packaging — packaging-shape renewal posture.
• ai-agent-sla-and-credit-schedule — SLA-class renewal interaction.
• ai-agent-msa-and-sla-addendum-templates — MSA addendum.