The AI usage pass-through clause

Not legal advice. This is a drafting starting point, not advice on your situation, and it has not been reviewed against the law of any particular jurisdiction. Fill in the bracketed values, and have your own lawyer review it before you rely on it. Use it freely, including commercially; no attribution needed.

The clause

Written for the common case: you bill the usage on with a stated handling charge. For billing it at cost, or as an allowance with overage, see the variants below.

Why each part is there

A clause that just says "AI costs are billable" gets challenged the first month the number is larger than the client pictured. Each term above exists to remove one specific argument.

Clause 3 is the whole clause

Everything else is boilerplate; this is the part that decides whether the invoice survives scrutiny. It fixes four things that are otherwise each a dispute: what counts as the client's usage (sessions against their repositories, not your general overhead), where the number comes from (the session logs, which exist whether or not anyone planned to bill from them), what rate applies (the provider's published list price, not a rate you set), and which token types are included.

That last one is not pedantry. Cache reads and writes are separately priced and, on long agentic sessions, cache traffic routinely dominates the bill. A clause that says only "tokens" invites a client to argue the cache portion was not what they agreed to. The published per-model rates, including cache, are the reference.

The subscription sentence

This is the sentence most drafts are missing, and it addresses the obvious objection: if you pay a flat $200-a-month seat, the client can reasonably ask why they are being invoiced $900. The answer is that you are billing the measured value of what their work consumed, at public rates, not reselling an invoice you received. Saying so in the contract is what makes the line defensible instead of awkward. Not saying it is how a pass-through line reads as a markup on nothing.

Clause 5 turns the risk into the client's decision

Agent usage is lumpy. One refactor can cost more than the previous three weeks. A notice threshold means a surprising month gets raised while it is happening rather than discovered on an invoice, which is the difference between a conversation and a write-off. Set [$Y] somewhere a genuinely unusual month trips it, not every busy week.

Clause 6 costs you nothing and settles everything

You already have the per-session records. Offering them pre-emptively is close to free and removes the main reason a client disputes a usage line, which is suspecting there is nothing behind it. The quarterly limit keeps it from turning into an open-ended audit obligation.

The half most templates leave out

Billing permission and processing permission are different problems, and the second is the bigger one. If your master agreement has a confidentiality clause, a subcontractor restriction, or anything about where client data may be sent, then running a client's source code through a third-party model may already need consent you do not have — and no amount of billing wording fixes that. A clause that lets you charge for something you were not permitted to do is worse than no clause.

So pair it with this, or confirm your existing agreement already covers it:

Before you sign anything containing term 2, check it against your providers' current terms for the plan you are actually on — consumer and business tiers differ on this, and the terms change. It is a promise about your vendors, so it is only as true as your last read of them.

Variants

Billing at cost, no margin

Delete plus a handling charge of [N]% of that amount from clause 2, and the handling charge if any from clause 4. Easiest to defend, and the right choice when the client is cost-sensitive or the relationship is new.

Included allowance, then overage

Replace clause 2 with:

Charges. The fees include attributable AI Tool usage of up to [$Z] per month, measured as set out in clause 3. Usage above that amount in any month is chargeable to the Client at the measured amount plus a handling charge of [N]%, invoiced monthly in arrears.

Predictable for the client, and it caps your exposure. Set [$Z] from a few months of real per-client numbers, not a guess.

A single line, where a full clause is overkill

For a short SOW or a freelance agreement, this carries most of the value:

We use AI coding tools in delivering the Services. Usage attributable to your work is measured per session, valued at the providers' published list rates plus [N]%, and invoiced monthly with a breakdown by workstream and model.

Copy lineKeeps the measurement basis and the markup; drops the notice and verification terms.

You are not rebilling at all

Then you do not need any of this. What you need is the per-client number anyway, so the next fixed-fee quote is priced against what the work actually costs you. That is the same measurement without the contract wording — covered in the billing models guide.

Then the invoice has to match

A clause promising a breakdown by workstream, model and rate basis is a commitment to produce one every month. If clause 4 says the invoice shows those things and it does not, you have given the client a reason to query it. The invoice line format shows what satisfies it, and the tracking guide covers getting per-client numbers out of the logs in the first place.

Two ways to produce them. Free and local: npx tallyhook reads the Claude Code and Codex logs already on your machine, and npx tallyhook --by client groups repositories into the clients you bill and applies your markup. Nothing is uploaded and there is no account. When one machine stops being enough — several developers, history older than your logs, or a report link you can send the client instead of a screenshot — that is what Tallyhook does, and there is a demo with no signup.

Questions