Rate Component Design Methodology

Designing rate components is an iterative process. Over time, you will develop intuitive skills that will allow you to avoid some iterations. However, when you're starting out, we recommend you follow these steps to design your rate components:

Flat Charge

This type of rate component is used to create bill lines that levy fixed charges and fees that aren't based on the taxpayer's income, asset value or other assessable amounts. The monthly charge shown above would be levied using this type of rate component.

Rate Quantity

This type of rate component is used to create bill lines that levy charges based on some type of input quantity.

Apply To

This type of rate component is used to create bill lines that levy charges based on the amount calculated on other bill lines.

Summary

This type of rate component is used to create a "subtotal" on the bill. It exists purely for aesthetic purposes.

Minimum Charge

This type of rate component is used to create bill lines that levy charges only when the sum of previously calculated lines is less than the minimum charge amount. The minimum monthly charge shown above would be levied using this type of rate component.

Note that if the values being compared are negative values, the comparison is NOT done on the absolute values, but rather on the actual values. For example, imagine you have a minimum discount of $ -2.00 and previous rate components have calculated a discount of $ -1.00. You want a rate component to create a bill line for $ -1.00 to apply a further discount. A minimum charge rate component will not work in this case because -1 is considered more than -2. For this business scenario you should use a maximum charge rate component.

Maximum Charge

This type of rate component is used to create bill lines that levy charges only when the sum of previously calculated lines is more than the maximum charge amount.

Note that if the values being compared are negative values, the comparison is NOT done on the absolute values, but rather on the actual values. For example, imagine you have a maximum discount of $ -2.00 and previous rate components have calculated a discount of $ -3.00. You want a rate component to create a bill line for $1.00 to reduce the discount. A maximum charge rate component will not work in this case because -3 is considered less than -2. For this business scenario you should use a minimum charge rate component.

Exact Charge

This type of rate component is used to force a bill to add up to a given amount (regardless of how much the bill would be based on earlier rate components).

Calculation Algorithm

This type of rate component enables you to produce bill calculation lines based on logic in an algorithm that you supply. Use this rate component when none of the other rate component functions will provide you with the logic you require.

The following tables provide guidance in respect of which of the methods to use:

Specify value in the rate component

You'd specify the value in the rate component when the value in the rate is specific to that rate and is applied to all taxpayers regardless. For example, if you see a provision in the rate to add a trash fee of $45, you'd specify 45.00 directly in the rate.

Use a rate factor to define the value

The following paragraphs describe when you'd use a rate factor to define a unit rate / percent / flat amount.

The same charge exists in many rates.

The amount being charged varies depending on where the taxpayer lives. If you have a rate where the charge differs depending on where the taxpayer lives, you should use a rate factor to levy this type of charge.

A charge (or discount) is only levied for a subset of taxpayers for defined periods of time.

The charge differs per taxpayer.

Use a "for calculation purposes only" rate component

This is complicated to explain and is not used very often, but it is very powerful and handles some very complicated algorithms. It works like this - you calculate the charge / percent / flat charge on another rate component (marked as "for calculation purposes only" so it won't affect the bill amount), and then reference it on the "real" rate component.

Call an algorithm

This is complicated to explain and is not used very often, but it is very powerful and handles some very complicated examples. It works like this - you call an algorithm and it calculates the charge / percent / charge.

We supply an example of one such algorithm in the base package. If your rates require additional algorithms, you will have to develop additional algorithms. Refer to How to set up rate quantity rate components under Rate Component - Main Information for more information about this type of algorithm.

At this point, you're ready to start entering your rate components.