Revenue Allocation for One-Time and Recurring Subscription Lines
The information in this topic applies regardless of whether you check the Create Revenue Elements for Subscription Revisions accounting preference except where the accounting preference is clearly identified.
The Advanced Revenue Management (Revenue Allocation) feature must be enabled as a prerequisite for revenue allocation.
To allocate revenue for one-time and recurring subscription lines, revenue elements include a field called Alternate Quantity. The alternate quantity is the result of the quantity of the subscription line item multiplied by the recurrence frequency, which is the number of times the customer is charged over the subscription term.
For example, consider two subscription lines. The line in example A has a term of 6 years with an annual recurrence frequency and a quantity of 2. Its alternate quantity is 12. The line in example B has a term of 3 years with a monthly recurrence frequency and a quantity of 5. Its alternate quantity is 180.
|
|
Example A |
Example B |
|---|---|---|
|
Term |
6 years |
3 years |
|
Recurrence Frequency |
Annually |
Monthly |
|
Term x Recurrence Frequency |
6 year term × 1 charge per year = 6 |
3 year term × 12 charges per year = 36 |
|
Quantity |
2 |
5 |
|
Alternate Quantity |
2 × 6 = 12 |
5 × 36 = 180 |
The fair value price record must include the appropriate values for Units Type and Units to support the allocation. When you include a value in Alternate Quantity and the other alternate fields, the {quantity} field in fair value formulas uses the alternate quantity. Units Type and Units are displayed on the fair value price record only when you enable the Multiple Units of Measure feature. For information, see Multiple Units of Measure.
Alternate Quantity Computation for Activation Revenue Arrangement When the Billing Schedule Starts Mid-Month
The following example shows how the Alternate Quantity is computed for the activation revenue arrangement when the billing schedule starts mid-month and proration is selected for subscription start date and subscription end date:
-
Start Date 8/1/2019
-
End Date 11/30/2019
-
Recurrence Date 8/16/2019
With the recurrence start date preference on, the billing account invoice periods affect the subscription recurrence pattern.
The billing account affects the alternate quantity because the charge and rating period are offset from the start date, causing the recurrence start date to be 8/16/2019 for the subscription. This makes the first and last charge periods prorated, as shown in the following table:
|
Rating Periods |
Start Date |
End Date |
Days |
Daily Quantity |
|---|---|---|---|---|
|
7/16/2019 |
8/15/2019 |
31 |
10 |
0.322581 |
|
8/16/2019 |
9/15/2019 |
31 |
10 |
0.322581 |
|
9/16/2019 |
10/15/2019 |
30 |
10 |
0.333333 |
|
10/16/2019 |
11/15/2019 |
31 |
10 |
0.322581 |
|
11/16/2019 |
12/15/2019 |
30 |
10 |
0.333333 |
|
Charge Periods |
|
|
|
|
|
8/1/2019 |
8/15/2019 |
15 |
4.8387097 |
|
|
8/16/2019 |
9/15/2019 |
31 |
10 |
|
|
9/16/2019 |
10/15/2019 |
30 |
10 |
|
|
10/16/2019 |
11/15/2019 |
31 |
10 |
|
|
11/16/2019 |
11/30/2019 |
15 |
5 |
|
|
|
|
|
39.8387097 |
|