{
  "id": "engagement-models-commercial/contract-structure-commercial-terms/contract-structure-and-the-commercial-model",
  "title": "Contract Structure and the Commercial Model",
  "slug": "engagement-models-commercial/contract-structure-commercial-terms/contract-structure-and-the-commercial-model",
  "description": "How our engagement is structured commercially: fixed-price managed services subscription, consumption-based cloud and connectivity, 36-month default minimum term, opex rather than capital.",
  "category": "",
  "content": "This page covers how our engagement is priced and structured. For a clause-level summary of the published General Terms — liability, IP, termination, audit rights — see the commercial terms page under Trust and Compliance.\n\n## The commercial model\n\n**Managed services: fixed-price subscription.** Predictable, budgetable, and not sensitive to ticket volume. The point of a fixed price in managed services is that it aligns incentives — a provider paid per incident has no reason to reduce incidents.\n\n**Cloud and connectivity: consumption-based.** Pay-as-you-grow, so infrastructure spend scales with the business rather than requiring periodic capital deployment.\n\n**Technology Services: project or consumption.** Defined scope, defined price, or hardware-as-a-service on an operating basis.\n\n## Opex rather than capital\n\nThe mechanism worth understanding is not the accounting treatment — it is what removing IT capital investment does to growth capacity.\n\nAn organisation funding IT through capital refresh cycles faces a periodic, lumpy decision that competes directly with growth investment. Under a consumption model that decision disappears: capacity is added as needed and paid for as consumed. For businesses whose capital is better deployed into acquisitions, developments, inventory or headcount, this is the substantive argument rather than a finance preference.\n\nIt also changes the internal conversation. A predictable monthly cost is defensible to a board in a way that a periodic capital request is not.\n\n## Term\n\n**36-month default minimum service period.**\n\nThree years is a substantial commitment for a mid-market organisation, and it is worth understanding why it exists rather than treating it as a negotiating position. The transition-in investment a provider makes at the start of a managed services engagement — discovery, documentation, tooling deployment, knowledge transfer, service desk establishment — is real and front-loaded. It is amortised across the initial term. A provider offering a twelve-month managed services term either has a thinner transition or has priced the risk into the monthly rate.\n\nRenewal and holdover mechanics are defined, covering what happens when a term expires without a signed extension.\n\n## What is included versus what is additional\n\nThis is the question to force into explicit writing during evaluation, for two reasons:\n\n**Service scope.** Managed services covers service desk, infrastructure and end-user computing. Whether a specific system, site or integration falls inside that scope should be stated per engagement rather than assumed.\n\n**Security capabilities.** Vulnerability management, incident response retainer and vCISO advisory appear in our security materials. Whether each is included in an MDR subscription or contracted as an addition depends on the engagement — ask for it to be stated line by line in your proposal.\n\nA proposal that is vague about the inclusion boundary is not a cheaper proposal; it is a deferred conversation.\n\n## Payment mechanics\n\n- **Invoice disputes** — 60 business day window to raise a dispute\n- **Late payment** — interest at 4% above the RBA cash rate\n\n## Pricing\n\nManaged services engagements are quoted against seat count, estate complexity, service scope and the transition required — variables that make a published per-seat figure misleading rather than helpful at this end of the market.\n\nWhat you should expect from a quote: the seat or unit basis, what sits inside scope, what is additional, the transition cost treated as a defined item, and the service level schedule attaching to each service.\n\n## Service levels\n\n---\n\n*Commercial arrangements are governed by our published general terms; specific customer agreements may vary.*\n",
  "geography": {},
  "metadata": {},
  "publishedAt": "2026-07-30T00:29:20.894445+00:00Z",
  "tags": [
    "managed services pricing model",
    "it capital expenditure vs opex",
    "service scope definition",
    "vendor contract terms"
  ],
  "workspaceId": "fe4e090e-6d63-41ce-afda-4ccc355412ea",
  "_links": {
    "canonical": "https://blueapache.agentic.norg.ai/engagement-models-commercial/contract-structure-commercial-terms/contract-structure-and-the-commercial-model/"
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}