Last verified with: 10.8.6.0
Overview #
High Watermark Billing allows organizations to charge customers based on a single representative usage value within a billing period, rather than charging for every individual usage record.
Instead of billing for total consumption across the period, the system determines a defined “watermark” value for each service or identifier and uses that value as the basis for billing.
This approach is commonly used in communications, cloud infrastructure, CDN, and SaaS markets where customers are billed based on peak usage, last reported usage, or a statistical representation of usage across a period.
High Watermark Billing supports multiple calculation types, hierarchical account structures, bucket entitlements, and invoicer-level aggregation to align with modern usage-based commercial models.
What Is a High Watermark? #
A High Watermark represents a single usage value selected from all usage activity within a billing period.
High Watermark Usage determines the chargeable billing value for a billing period based on the configured aggregation method, rather than billing each usage record individually.
Supported calculation types include:
- Max – The highest usage record in the billing period
- Last – The last usage record received in the billing period
- Continuous – A cumulative running value across the period, including generated values where required
Once the applicable value is determined, only that value is billed. All other usage records for that identifier in the period are not charged.
Why Businesses Use High Watermark Billing #
High Watermark Billing is ideal when pricing is based on capacity, peak demand, or contractual thresholds rather than pure consumption totals.
It allows businesses to:
- Charge for peak bandwidth or capacity usage
- Align billing with contracted performance commitments
- Simplify invoice presentation
- Support enterprise pricing models
- Reduce billing noise caused by fluctuating daily usage
This model is especially common in CDN, telecommunications, cloud infrastructure, and API-based SaaS environments.
How High Watermark Billing Works #
Step 1: Determine the Calculation Method #
Each usage rate is configured with a calculation type such as Max, Last or Continuous.
This defines how the system selects the single chargeable usage value for the billing period.
Step 2: Identify the Chargeable Usage per Identifier #
For each usage identifier on each account:
- The system evaluates all usage records within the billing period
- It selects the appropriate value based on the configured calculation type
- Only that selected value becomes chargeable
All other usage records are retained for audit purposes but are not billed.
Step 3: Apply Aggregation Rules (if applicable) #
High Watermark Billing supports aggregation at different levels:
- Per individual account
- Across subaccounts
- At the Invoicer (parent account) level
When aggregated at the Invoicer level:
- The system calculates the high watermark value per usage identifier per subaccount
- It then sums those individual identifier values
- The final total is billed at the parent Invoicer level
This supports hierarchical billing models and enterprise customer structures.
Invoicer-Level High Watermark Aggregation #
Invoicer-level aggregation is supported for applicable high-watermark calculation types. Continuous aggregation is not supported at the invoicer level.
This approach:
- Determines the high watermark usage value for each usage identifier on each subaccount
- Sums those individual identifier values across the hierarchy
- Applies the rate configured at the Invoicer level
Important considerations:
- Usage rate overrides must exist at the Invoicer Account Price Plan level
- Subaccount overrides are not used when aggregation occurs at the Invoicer level
- Counting rules and tiered pricing can still apply at this aggregated level
This model aligns closely with how organizations like CDN and infrastructure providers structure enterprise contracts.
Buckets and High Watermark Billing #
High Watermark Billing can work alongside non-monetary bucket entitlements.
When bucket inclusion is configured:
- The system first determines the chargeable high watermark value
- It then subtracts any applicable bucket entitlement from that value
- Only the remaining overage amount is billed
If the bucket fully covers the high watermark value, no overage is charged.
This design ensures buckets are applied only to the final chargeable value rather than to every usage record.
Real World Scenarios #
Communications Provider – Peak Bandwidth Billing #
A telecommunications provider sells bandwidth services based on peak usage.
During a billing period:
- The customer may have fluctuating daily bandwidth usage
- The highest usage point in the month is identified
- The customer is billed based on that peak value
This protects the provider from undercharging during traffic spikes while giving customers transparent capacity-based pricing.
CDN Provider – Aggregated Usage Across Regions #
A CDN provider offers enterprise contracts where:
- Multiple regional services generate usage
- Each service has its own identifier
- Peak usage per region is calculated
- Those values are aggregated at the parent account
The final invoice reflects the total peak capacity across the enterprise structure.
This model mirrors how many global infrastructure providers price enterprise agreements.
SaaS Platform – API Rate Based on Last Recorded Tier #
A SaaS platform tracks API subscription tiers that adjust dynamically.
During the month:
- A customer may upgrade usage capacity
- The last usage record reflects the final contracted tier
- Billing is based on the final tier level rather than cumulative requests
This simplifies billing and aligns with subscription-style pricing models.
Infrastructure Platform – Bandwidth Unlocks Request Entitlements #
A cloud infrastructure provider may allow bandwidth consumption to unlock additional included usage for another service.
For example:
- For every 1 GB of bandwidth consumed, a customer receives a set number of included requests
- The system calculates the high watermark bandwidth value
- The entitlement bucket is applied
- Only request overage beyond the entitlement is billed
This supports modern bundled commercial models.
Key Business Benefits #
High Watermark Billing delivers:
- Support for enterprise capacity-based pricing models
- Alignment with how infrastructure and SaaS markets structure contracts
- Accurate aggregation across hierarchical account structures
- Simplified invoice presentation
- Compatibility with bucket entitlements and tiered pricing
- Improved forecasting through revenue modeling integration
- Reduced operational reconciliation through automated recalculation
When to Use High Watermark Billing #
High Watermark Billing is ideal when:
- Pricing is tied to capacity rather than total volume
- Contracts reference peak, average, or statistical usage
- Enterprise hierarchies require consolidated billing
- Bundled entitlements must be applied after usage evaluation
- Customers expect transparent, contract-aligned billing logic