License Baseline Ratchet
When the minimum license or commitment level in a contract increases from one term to the next, and doesn't come back down, even if actual usage later declines.
When minimum license commitments increase across contract terms.
What this looks like from the vendor side
I spent years on the vendor side of enterprise software, and the baseline ratchet is a quiet but consistent mechanic. A team grows, adds seats mid-term to keep up, and that higher seat count becomes the new floor at the next renewal, whether or not the growth holds. If the team later shrinks, the contract's minimum commitment usually doesn't shrink with it, unless the customer specifically negotiates that flexibility back in.
How the licence floor moves
Seats added for a project or a team that has since changed shape.
The peak becomes the new minimum unless it is challenged.
The gap you are paying for is the ratchet.
Why it matters
Ratcheted baselines mean your minimum spend can only move in one direction over time, up, regardless of how your actual needs change. Left unchecked across several renewal cycles, the gap between the contractual floor and your real usage can become substantial.
How to spot it in your own contracts
- Check whether the contract includes a stated minimum commitment, and how it's set at each renewal
- Compare the current minimum against your actual usage trend, not just the current term's number
- Ask directly, before renewal, whether the minimum can be revised downward if usage has genuinely declined
How Venduris fits into this
Venduris tracks your committed minimums against actual usage across every renewal cycle, so a ratcheted baseline that no longer matches reality is visible before it locks in for another term.