Revenue recognition examples

This page demonstrates how an example company called CloudNet handles revenue recognition with Metronome.

CloudNet offers two products:

CloudCompute, billed at $1/CPU hour
CloudStorage, billed at $0.50/GB storage monthly

Data export tables

For each scenario below, Metronome populates data export tables in CloudNet’s object storage destination or data warehouse. In turn, CloudNet can use this data, based on the rules described in the parent section, to accurately recognize revenue for its usage based business.

Table name	Description
Customer	This table contains customer metadata like CRM customer ID or ERP customer ID that are needed to match Metronome’s billing data to downstream systems for revenue recognition.
Contract	This table contains metadata like contract type, opportunity ID, or sales order ID that are needed to match Metronome’s billing data to downstream systems for revenue recognition.
Invoice	This table contains all invoices generated by Metronome. Invoices include `invoices.type` , which indicates the types of charges included on each invoice (prepaid commit purchase, usage, or postpaid commit true-up).
Invoice line items	This table contains all line items associated to each invoice. Line items include: `commit_id`, necessary for determination of revenue category (credit drawdown, on demand, prepaid commit drawdown, postpaid commit drawdown, or overage) `product_id`, necessary for recognizing revenue against specific products `starting_at` and `ending_before`, necessary for determining the revenue recognition service perio
Balances	This table contains a consolidation of all credits and commits. Balances include `balances.type` , which indicates if the balance is prepaid, postpaid, or credit. Each balance contains a ledger, which tracks all invoice deductions, manual adjustments, expirations, or true-ups.

Scenario 1: On-demand (pay-as-you-go) usage with free credits

In this scenario, Customer A signs up for a free trial to CloudNet on Jan 1, and receives $500 worth of free credits that expire in 15 days.

From Jan 1 to Jan 15, Customer A consumes 360 hours of CloudCompute and 100 GB of CloudStorage.

From Jan 15 to Jan 31, Customer A consumes 384 hours of CloudCompute and 150 GB of CloudStorage.

As a result of that scenario, the data shown in these tables populates in the CloudNet warehouse through Metronome data export.

Customer

id	name
10001	Customer A

Contract

id	customer_id	starting_at	ending_before
20001	10001	Jan 1, 2024 00:00	null

Invoice

id	invoice_type	total	issued_at	start_timestamp	end_timestamp	contract_id
30001	CONTRACT_USAGE	459	Feb 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20001

Invoice line items

id	invoice_id	quantity	unit_price	total	line_item_name	product_name	commit_id	starting_at	ending_before
40001	30001	360	1.00	360	CloudCompute	CloudCompute	50001	Jan 1, 2024 00:00	Jan 16, 2024 00:00
40002	30001	100	0.50	50	CloudStorage	CloudStorage	50001	Jan 1, 2024 00:00	Jan 16, 2024 00:00
40003	30001	1	null	-360	Free_trial_credits applied	CloudCompute	50001	Jan 1, 2024 00:00	Jan 16, 2024 00:00
40004	30001	1	null	-50	Free_trial_credits applied	CloudStorage	50001	Jan 1, 2024 00:00	Jan 16, 2024 00:00
40005	30001	384	1.00	384	CloudCompute	CloudCompute	null	Jan 16, 2024 00:00	Feb 1, 2024 00:00
40006	30001	150	0.50	75	CloudStorage	CloudStorage	null	Jan 16, 2024 00:00	Feb 1, 2024 00:00

Balances ledger

balances_id	customer_id	contract id	name	ledger type	ledger_entry_id	ledger entry type	ledger entry timestamp	ledger entry amount
50001	10001	20001	Free_trial_credits	CREDIT	60001	credit_segment_start	Jan 1, 2024 00:00	500
50001	10001	20001	Free_trial_credits	CREDIT	60002	credit_automated_invoice_deduction	Jan 16, 2024 00:00	-410
50001	10001	20001	Free_trial_credits	CREDIT	60003	credit_segment_expiration	Jan 16, 2024 00:00	-90

Using the table data, CloudNet recognizes this revenue:

On Feb 1, Metronome issues a usage invoice for $459.

The merchant can report that $360 of free credits were applied to CloudCompute
The merchant can report that $50 of free credits were applied to CloudStorage
The merchant can report that $90 of free credits were expired
The merchant can recognize $384 of on-demand revenue for CloudCompute
The merchant can recognize $150 of on-demand revenue for CloudStorage

Scenario 2a: Prepaid commitment (upfront payment and first month of usage)

In this scenario, Customer B agrees to a prepaid commitment of $10,000 on Jan 1, 2024. The prepayment is due immediately and the commitment period is 1 year. In return for the prepaid commitment, Customer B receives a 20% discount off of list rates.

From Jan 1 to Jan 31, Customer B consumes 1000 hours of CloudCompute and 250 GB of CloudStorage.

As a result of that scenario, the data shown in these tables populates in the CloudNet warehouse through Metronome data export.

Customer

id	name
10002	Customer B

Contract

id	customer_id	starting_at	ending_before
20002	10001	Jan 1, 2024 00:00	Jan 1, 2025

Invoice

id	invoice_type	total	issued_at	start_timestamp	end_timestamp	contract_id
30002	CONTRACT_SCHEDULED	10,000	Jan 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20002
30003	CONTRACT_USAGE	0	Feb 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20002

Invoice line items

id	invoice_id	quantity	unit_price	total	line_item_name	product_name	commit_id	starting_at	ending_before
40005	30002	1	10000	10000	Prepaid Commit	Prepaid Commit	50002	Jan 1, 2024 00:00	Jan 1, 2024 00:00
40006	30003	1,000	0.80	800	CloudCompute	CloudCompute	50002	Jan 1, 2024 00:00	Feb 1, 2024 00:00
40007	30003	250	0.40	100	CloudStorage	CloudStorage	50002	Jan 1, 2024 00:00	Feb 1, 2024 00:00
40008	30003	1	null	-800	prepaid_commitment applied	CloudCompute	50002	Jan 1, 2024 00:00	Feb 1, 2024 00:00
40009	30003	1	null	-100	prepaid_commitment applied	CloudStorage	50002	Jan 1, 2024 00:00	Feb 1, 2024 00:00

Balances ledger

balances_id	customer_id	contract id	name	ledger type	ledger entry type	ledger entry timestamp	ledger entry amount
50002	10002	20002	prepaid_commitment	PREPAID	prepaid_segment_start	Jan 1, 2024 00:00	10,000
50002	10002	20002	prepaid_commitment	PREPAID	prepaid_automated_invoice_deduction	Feb 1, 2024 00:00	-900

Using the table data, CloudNet recognizes this revenue:

On Jan 1, Metronome issues a scheduled invoice for $10,000.

The merchant can defer $10,000 of prepaid commit revenue

On Feb 1, Metronome issues a usage invoice for $0.

The merchant can recognize $800 of prepaid commit revenue for CloudCompute
The merchant can recognize $100 of prepaid commit revenue for CloudStorage

Scenario 2b: Prepaid commitment (commit burn down and true-up)

In this scenario, Customer B continues to burn down $700 of prepaid commits every month during their contract ($600 for CloudCompute and $100 for CloudStorage). Metronome issues a zero-dollar invoice each month while the commit balance is drawn down. At the end of month 12, Metronome expires the remaining commit balance ($1,400).

As a result of that scenario, the data shown in these tables populates in the CloudNet warehouse through Metronome data export.

Month	Usage Charges	Remaining Commit Balance
1	900	9,100
2	700	8,400
3	700	7,700
4	700	7,000
5	700	6,300
6	700	5,600
7	700	4,900
8	700	4,200
9	700	3,500
10	700	2,800
11	700	2,100
12	700	1,400

Invoice

id	invoice_type	total	issued_at	start_timestamp	end_timestamp	contract_id
30002	CONTRACT_SCHEDULED	10,000	Jan 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20002
30003	CONTRACT_USAGE	0	Feb 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20002
30004	CONTRACT_USAGE	0	Mar 1, 2024	Feb 1, 2024 00:00	Mar 1, 2024 00:00	20002
30005	CONTRACT_USAGE	0	Apr 1, 2024	Mar 1, 2024 00:00	Apr 1, 2024 00:00	20002
30006	CONTRACT_USAGE	0	May 1, 2024	Apr 1, 2024 00:00	May 1, 2024 00:00	20002
30007	CONTRACT_USAGE	0	Jun 1, 2024	May 1, 2024 00:00	Jun 1, 2024 00:00	20002
30008	CONTRACT_USAGE	0	Jul 1, 2024	Jun 1, 2024 00:00	Jul 1, 2024 00:00	20002
30009	CONTRACT_USAGE	0	Aug 1, 2024	Jul 1, 2024 00:00	Aug 1, 2024 00:00	20002
30010	CONTRACT_USAGE	0	Sep 1, 2024	Aug 1, 2024 00:00	Sep 1, 2024 00:00	20002
30011	CONTRACT_USAGE	0	Oct 1, 2024	Sep 1, 2024 00:00	Oct 1, 2024 00:00	20002
30012	CONTRACT_USAGE	0	Nov 1, 2024	Oct 1, 2024 00:00	Nov 1, 2024 00:00	20002
30013	CONTRACT_USAGE	0	Dec 1, 2024	Nov 1, 2024 00:00	Dec 1, 2024 00:00	20002
30014	CONTRACT_USAGE	0	Jan 1, 2025	Dec 1, 2024 00:00	Jan 1, 2025 00:00	20002

Balances ledger

balances_id	customer_id	contract id	name	ledger_type	ledger_entry_id	ledger_entry_type	ledger_entry_timestamp	ledger_entry_amount
50002	10002	20002	prepaid_commitment	PREPAID	60001	prepaid_segment_start	Jan 1, 2024 00:00	10,000
50002	10002	20002	prepaid_commitment	PREPAID	60002	prepaid_automated_invoice_deduction	Feb 1, 2024 00:00	-900
50002	10002	20002	prepaid_commitment	PREPAID	60003	prepaid_automated_invoice_deduction	Mar 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60004	prepaid_automated_invoice_deduction	Apr 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60005	prepaid_automated_invoice_deduction	May 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60006	prepaid_automated_invoice_deduction	Jun 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60007	prepaid_automated_invoice_deduction	Jul 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60008	prepaid_automated_invoice_deduction	Aug 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60009	prepaid_automated_invoice_deduction	Sep 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60010	prepaid_automated_invoice_deduction	Oct 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60011	prepaid_automated_invoice_deduction	Nov 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60012	prepaid_automated_invoice_deduction	Dec 1, 2024 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60013	prepaid_automated_invoice_deduction	Jan 1, 2025 00:00	-700
50002	10002	20002	prepaid_commitment	PREPAID	60014	prepaid_segment_expiration	Jan 1, 2025 00:00	-1,400

Using the table data, CloudNet recognizes the following revenue:

In month 1, Metronome issues a $0 usage invoice
- The merchant can recognize $800 of prepaid commit revenue for CloudCompute
- The merchant can recognize $100 of prepaid commit revenue for CloudStorage
From months 2 - 12, Metronome issues a $0 usage invoices
- The merchant can recognize $700 of prepaid commit revenue for CloudCompute each month
- The merchant can recognize $100 of prepaid commit revenue for CloudStorage each month
On Jan 1, 2025, Metronome expires $1400 remaining balance of unused prepaid commit
- The merchant can recognize $1400 of prepaid commit revenue

Scenario 2c: Prepaid commitment (commit burn down and overage)

In this scenario, Customer B continues to burn down $1,000 ($900 for CloudCompute and $100 for CloudStorage) of prepaid commits every month during their contract. Metronome issues a zero-dollar invoice each month while the commit balance is drawn down. Starting in month 11, Customer B starts to incur overage charges.

As a result of that scenario, the data shown in these tables populates in the CloudNet warehouse through Metronome data export.

Month	Usage Charges	Overage Charges	Invoice Total	Remaining Commit Balance
1	900	0	0	9,100
2	1,000	0	0	8,100
3	1,000	0	0	7,100
4	1,000	0	0	6,100
5	1,000	0	0	5,100
6	1,000	0	0	4,100
7	1,000	0	0	3,100
8	1,000	0	0	2,100
9	1,000	0	0	1,100
10	1,000	0	0	100
11	1,000	900	800	0
12	1,000	1,000	1,000	0

Invoice

id	invoice_type	total	issued_at	start_timestamp	end_timestamp	contract_id
30002	CONTRACT_SCHEDULED	10,000	Jan 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20002
30003	CONTRACT_USAGE	0	Feb 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20002
30004	CONTRACT_USAGE	0	Mar 1, 2024	Feb 1, 2024 00:00	Mar 1, 2024 00:00	20002
30005	CONTRACT_USAGE	0	Apr 1, 2024	Mar 1, 2024 00:00	Apr 1, 2024 00:00	20002
30006	CONTRACT_USAGE	0	May 1, 2024	Apr 1, 2024 00:00	May 1, 2024 00:00	20002
30007	CONTRACT_USAGE	0	Jun 1, 2024	May 1, 2024 00:00	Jun 1, 2024 00:00	20002
30008	CONTRACT_USAGE	0	Jul 1, 2024	Jun 1, 2024 00:00	Jul 1, 2024 00:00	20002
30009	CONTRACT_USAGE	0	Aug 1, 2024	Jul 1, 2024 00:00	Aug 1, 2024 00:00	20002
30010	CONTRACT_USAGE	0	Sep 1, 2024	Aug 1, 2024 00:00	Sep 1, 2024 00:00	20002
30011	CONTRACT_USAGE	0	Oct 1, 2024	Sep 1, 2024 00:00	Oct 1, 2024 00:00	20002
30012	CONTRACT_USAGE	0	Nov 1, 2024	Oct 1, 2024 00:00	Nov 1, 2024 00:00	20002
30013	CONTRACT_USAGE	900	Dec 1, 2024	Nov 1, 2024 00:00	Dec 1, 2024 00:00	20002
30014	CONTRACT_USAGE	1,000	Jan 1, 2025	Dec 1, 2024 00:00	Jan 1, 2025 00:00	20002

Invoice line item (overage invoice only)

id	invoice id	quantity	unit_price	total	line_item_name	product_name	commit id	starting_at	ending_before
40006	30013	1,000	0.80	800	CloudCompute	CloudCompute	50002	Nov 1, 2024 00:00	Dec 1, 2024 00:00
40007	30013	500	0.40	200	CloudStorage	CloudStorage	50002	Nov 1, 2024 00:00	Dec 1, 2024 00:00
40008	30013	1	null	-100	prepaid_commitment applied	CloudCompute	50002	Nov 1, 2024 00:00	Dec 1, 2024 00:00

Balances ledger

balances_id	customer_id	contract id	name	ledger_type	ledger_entry_id	ledger_entry_type	ledger_entry_timestamp	ledger_entry_amount
50002	10002	20002	prepaid_commitment	PREPAID	60001	prepaid_segment_start	Jan 1, 2024 00:00	10,000
50002	10002	20002	prepaid_commitment	PREPAID	60002	prepaid_automated_invoice_deduction	Feb 1, 2024 00:00	-900
50002	10002	20002	prepaid_commitment	PREPAID	60003	prepaid_automated_invoice_deduction	Mar 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60004	prepaid_automated_invoice_deduction	Apr 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60005	prepaid_automated_invoice_deduction	May 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60006	prepaid_automated_invoice_deduction	Jun 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60007	prepaid_automated_invoice_deduction	Jul 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60008	prepaid_automated_invoice_deduction	Aug 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60009	prepaid_automated_invoice_deduction	Sep 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60010	prepaid_automated_invoice_deduction	Oct 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60011	prepaid_automated_invoice_deduction	Nov 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60012	prepaid_automated_invoice_deduction	Dec 1, 2024 00:00	-1,000
50002	10002	20002	prepaid_commitment	PREPAID	60013	prepaid_automated_invoice_deduction	Jan 1, 2025 00:00	-1,000

Using the table data, CloudNet recognizes the following revenue:

In month 1, Metronome issues a $0 usage invoice
- The merchant can recognize $800 of prepaid commit revenue for CloudCompute
- The merchant can recognize $100 of prepaid commit revenue for CloudStorage
From months 2 - 10, Metronome a issues $0 usage invoices
- The merchant can recognize $900 of prepaid commit revenue for CloudCompute each month
- The merchant can recognize $100 of prepaid commit revenue for CloudStorage each month
In month 11, Metronome issues a $900 usage invoice
- The merchant can recognize $900 of prepaid commit revenue for CloudCompute
- The merchant can recognize $100 of prepaid commit revenue for CloudStorage
In month 12, Metronome issues a $1000 usage invoice
- The merchant can recognize $900 of prepaid commit revenue for CloudCompute
- The merchant can recognize $100 of prepaid commit revenue for CloudStorage

Scenario 3: Postpaid commitment, with true-up invoice

In this scenario, Customer C agrees to a postpaid commitment of $10,000. They consume $800 ($700 of CloudCompute, $100 of CloudStorage) of usage each month for 12 months.

At the end of the commitment period, their cumulative spending is $9,600. Metronome issues a true-up invoice of $400 to true-up the remaining commitment balance.

As a result of that scenario, the data shown in these tables populates in the CloudNet warehouse through Metronome data export.

Customer

id	name
10003	Customer C

Contract

id	customer_id	starting_at	ending_before
20003	10003	Jan 1, 2024 00:00	Jan 1, 2025

Invoice

id	invoice_type	total	issued_at	start_timestamp	end_timestamp	contract_id
30002	CONTRACT_SCHEDULED	800	Feb 1, 2024	Jan 1, 2024 00:00	Feb 1, 2024 00:00	20003
30003	CONTRACT_SCHEDULED	800	Mar 1, 2024	Feb 1, 2024 00:00	Mar 1, 2024 00:00	20003
30004	CONTRACT_SCHEDULED	800	Apr 1, 2024	Mar 1, 2024 00:00	Apr 1, 2024 00:00	20003
30005	CONTRACT_SCHEDULED	800	May 1, 2024	Apr 1, 2024 00:00	May 1, 2024 00:00	20003
30006	CONTRACT_SCHEDULED	800	Jun 1, 2024	May 1, 2024 00:00	Jun 1, 2024 00:00	20003
30007	CONTRACT_SCHEDULED	800	Jul 1, 2024	Jun 1, 2024 00:00	Jul 1, 2024 00:00	20003
30008	CONTRACT_SCHEDULED	800	Aug 1, 2024	Jul 1, 2024 00:00	Aug 1, 2024 00:00	20003
30009	CONTRACT_SCHEDULED	800	Sep 1, 2024	Aug 1, 2024 00:00	Sep 1, 2024 00:00	20003
30010	CONTRACT_SCHEDULED	800	Oct 1, 2024	Sep 1, 2024 00:00	Oct 1, 2024 00:00	20003
30011	CONTRACT_SCHEDULED	800	Nov 1, 2024	Oct 1, 2024 00:00	Nov 1, 2024 00:00	20003
30011	CONTRACT_SCHEDULED	800	Dec 1, 2024	Nov 1, 2024 00:00	Dec 1, 2024 00:00	20003
30011	CONTRACT_SCHEDULED	800	Jan 1, 2025	Dec 1, 2024 00:00	Jan 1, 2025 00:00	20003
30012	CONTRACT_TRUEUP	400	Jan 1, 2025	Dec 1, 2024 00:00	Jan 1, 2025 00:00	20003

Balances ledger

balances_id	customer_id	contract id	name	commit_type	ledger_entry_id	ledger_entry_type	ledger_entry_timestamp	ledger_entry_amount
50003	10003	20003	postpaid_commitment	POSTPAID	60001	postpaid_initial_balance	Jan 1, 2024 00:00	10,000
50003	10003	20003	postpaid_commitment	POSTPAID	60002	postpaid_automated_invoice_deduction	Feb 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60003	postpaid_automated_invoice_deduction	Mar 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60004	postpaid_automated_invoice_deduction	Apr 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60005	postpaid_automated_invoice_deduction	May 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60006	postpaid_automated_invoice_deduction	Jun 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60007	postpaid_automated_invoice_deduction	Jul 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60008	postpaid_automated_invoice_deduction	Aug 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60009	postpaid_automated_invoice_deduction	Sep 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60010	postpaid_automated_invoice_deduction	Oct 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60011	postpaid_automated_invoice_deduction	Nov 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60012	postpaid_automated_invoice_deduction	Dec 1, 2024 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60013	postpaid_automated_invoice_deduction	Jan 1, 2025 00:00	-800
50003	10003	20003	postpaid_commitment	POSTPAID	60014	postpaid_trueup	Jan 1, 2025 00:00	-400

Using the table data, CloudNet recognizes the following revenue:

In month 1-12, Metronome issues a $800 usage invoice
- The merchant can recognize $700 of postpaid commit revenue for CloudCompute each month
- The merchant can recognize $100 of postpaid commit revenue for CloudStorage each month
After month 12, Metronome issues a $400 scheduled invoice for the postpaid true up
- The merchant can recognize $400 of postpaid commit revenue

Data export tables​

Scenario 1: On-demand (pay-as-you-go) usage with free credits​

Scenario 2a: Prepaid commitment (upfront payment and first month of usage)​

Scenario 2b: Prepaid commitment (commit burn down and true-up)​

Scenario 2c: Prepaid commitment (commit burn down and overage)​

Scenario 3: Postpaid commitment, with true-up invoice​

Data export tables

Scenario 1: On-demand (pay-as-you-go) usage with free credits

Scenario 2a: Prepaid commitment (upfront payment and first month of usage)

Scenario 2b: Prepaid commitment (commit burn down and true-up)

Scenario 2c: Prepaid commitment (commit burn down and overage)

Scenario 3: Postpaid commitment, with true-up invoice