SD service contract billing

Hello

We are in phase of configuring SD service contracts for mining equipments. Following are SD service contract billing related requirements.

1. Contract is billed monthly with fixed amount. This fixed amount is getting corrected as per usage of equipment ( service meter counter reading & Breakdown Hours). Can we handle this with explicitly by periodic (Monthly) billing plan method ? Can we give respective correction to billing plan line item as per variable component in billing due list?
2. Beyond certain cost limiting value the spare parts to be supplied under contract are free of cost (FOC). How to configure this condition.

Sanjeev Dhavan