Accumulated Rating
To make a charge per use for usage and overage services, you can price in one frequency and charge in another frequency. For instance, you can set an annual service price in a price book but charge customers monthly. This resets the pricing tiers annually and charges monthly for use.
Pricing frequencies determine how often to reset subscription line tiers. Charge frequencies indicate how often to charge the customer for the service. For example, annual pricing with monthly charging resets tiers annually but charges for any usage monthly.
Pricing frequency and charge frequency must be divisible by each other. Examples include quarterly and monthly, or weekly and biweekly. The pricing frequency and charge frequency must match for one-time, recurring, prepay and commit services types. Frequencies can only be changed when the subscription line is in the Draft or Pending Activation status.
Subscription plans have a Charge Per Usage Record column. You can choose Yes only for commit plus overage service and usage service types in the Draft or Pending Activation status.
Both subscription lines and plan lines have a Charge Per Usage field. To generate a charge per usage record, check the Charge Per Usage field.
When multiple charges are created in the same period, pricing details on the charge and invoice lines aren't combined.
Example:
A software provider offers a cloud storage service where customers are billed based on their data usage. The company wants to advertise an annual data allowance but let customers pay monthly, making budgeting easier for customers while keeping the offer competitive. The subscription is set up as follows:
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Service Plan: Cloud Storage that includes 1200 GB of data per year.
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Annual Price (in the price book): $1,200 (covering up to 1200 GB for the year).
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Pricing Frequency: Annual (tiers reset each year).
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Charge Frequency: Monthly (customer is billed each month).
How accumulated rating works:
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The pricing structure could be as follows:
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Tier 1, from 0 – 600 GB: $90 rate
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Tier 2, from 601 to 1000 GB – $100 rate
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Tier 3, over 1000 GB – $110 rate
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Data usage is tracked each month by adding usage tied to the service line. The quantity is accumulated over each month resulting in a specific price for each usage record.
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Whenever the accumulated usage goes past the thresholds of 600 or 1000, the rate jumps to the higher rate for those specific usage records, based on the total usage over the annual period.
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Then the pricing tiers reset at the start of the next annual cycle.
Summary Table 1: Accumulated Rating for Usage Services With Annual Pricing and Monthly Charging
|
Month |
Monthly Usage (GB) |
Cumulative Usage (GB) |
Charge (USD) |
|---|---|---|---|
|
1 |
90 |
90 |
$100 |
|
2 |
100 |
190 |
$100 |
|
3 |
450 |
650 |
$40,990 |
|
... |
... |
... |
... |
|
12 |
120 |
1300 |
$100 |
For Commit Plus Overage services where the overage is annual pricing with monthly charging, the overage tier accumulation doesn’t start until the commitment is fully consumed for the commitment pricing period.
With a 600-GB commitment, the tiers would start to be consumed after the 600-GB limit is reached. The cumulative usage at the end of the 12-month period of 1300 GB means that 700 GB is overage, resulting in hitting only the first two tiers.
Summary Table 2: Commit Plus Overage Services With Annual Pricing and Monthly Charging
|
Month |
Monthly Usage (GB) |
Cumulative Usage (GB) |
Charge (USD) |
Overage Charge |
|---|---|---|---|---|
|
Commit Charge |
0 |
0 |
20,000 |
— |
|
1 |
90 |
90 |
$0 |
— |
|
2 |
110 |
200 |
$0 |
— |
|
3 |
450 |
650 |
$0 |
$4500 |
|
... |
... |
... |
... |
... |
|
12 |
120 |
1300 |
$0 |
$12000 |