Cost shape and forecasting
Unknown pricing, and why it must stay unknown
When a pricing model has not been established for a contract, the correct value is unknown, and it should stay visible as unknown through every total it appears in. Substituting last year's invoice produces a forecast that looks precise, cannot be distinguished from the parts that are real, and is wrong in a direction nobody can estimate.
The Vendor Squeezer team. Last reviewed 2026-08-08. General guidance on contract structures, not legal advice, and not a statement about any particular vendor's terms.
Two different kinds of not knowing
The first is a gap in your records: the agreement states how it is charged, and nobody has read it into the register yet. That is work, and it has an answer.
The second is inherent: the agreement genuinely does not fix the cost, because it is consumption-based or time and materials. No amount of reading closes that one. Distinguishing the two matters, because only the first is a task and only the second is a permanent property of the contract.
What substitution actually costs
The argument for filling a blank with last year's number is that a total with a hole in it is not useful. The problem is that the filled total is worse: it carries the same confidence as the parts that are known, so a reader has no way to tell which parts to trust.
A leader who presents a number and then discovers a third of it was assumed loses more than the accuracy. They lose the ability to use the register as evidence at all, which is a much more expensive outcome than a total with a labelled gap in it.
Carrying unknown through a total honestly
The practical form is to report what is committed, report what is variable, and report what is not established, as three figures rather than one. That is not a compromise, it is more information: it tells the reader how much of the picture is firm and where the work is.
- Committed: amounts fixed by an agreement for the period.
- Variable: real spend whose amount depends on consumption.
- Not established: contracts whose pricing has not been recorded yet, counted as records rather than as money.
Questions to ask about your own agreement
- 1.Is this unknown because we have not read the agreement, or because the agreement does not fix a price?
- 2.If it is a records gap, who can close it and by when?
- 3.How much of the portfolio total is currently not established?
- 4.Does the total I am presenting distinguish committed from variable?
- 5.Would a reader of this number know which parts were assumed?
Common questions
Is an estimate ever acceptable?
Yes, when it is labelled as an estimate, carries its basis, and is not silently summed into a figure presented as committed spend. The problem is not estimating, it is estimating invisibly.
How do I stop unknown from becoming most of the register?
By treating each records gap as a task with an owner rather than as a display state. Gaps that are visible and assigned get closed; gaps that are only visible get tolerated.
Put this against your own vendors
Record the term, the notice deadline, and the exit cost against the vendor once, and the next renewal review starts from an answer instead of a search. Free while in early access.