Setting Up Items for Contract Renewals

Item records define how renewal transactions and contracts are generated. If an item is set up for automated renewal, it is automatically included in contracts and renewal transactions.

Typically, contract items are defined with an item type of Non-inventory Item for Sale in NetSuite. The renewal behavior is determined by the fields under the Vertical Classification section on item records.

To set up items for Contract Renewals

Go to Lists > Accounting > Items > New.
Select the item type for the contract item that you want to create. Most contract items are defined with an item type of Non-inventory Item for Sale. For more information about NetSuite item types, see Creating Item Records.
On the Item form, make sure that a Contract Renewal custom form is selected in the Custom Form field. For more information about setting preferred forms, see Setting Preferred Forms for Contract Renewals.
Enter values in the fields on the Primary Information and Classification sections as you would in a standard item form. For more information, see Creating Item Records.

On the Vertical Classifications section, specify values for the fields that will determine the renewal behavior of the item.

Field Name	Description
Term/Contract Pricing Type	Select a contract pricing type for the item. The contract pricing type determines how the rate will be calculated for an item. The following contract pricing types are available: Monthly – Item price entered on the Pricing subtab is treated as a monthly price. Annually – Item price entered on the Pricing subtab is treated as an annual price. Actual Item Price – Item price entered on the Pricing subtab is considered as the actual rate. If you select this option, the term will not be considered in the rate calculation. Not Applicable – Select this option if none of the other options are applicable for the item. For example, for Perpetual Licenses or non-renewing items.
Product Line	Choose which product line this item belongs to. A product line is a family of items that are organized around one flagship product. For more information, see Setting Up Product Lines for Contract Renewals.
Item Category	Select the item category where this item should be included in. The item category determines whether an item is renewed and also when it is billed. The following item categories are available: License - Perpetual License - Term Maintenance - New Maintenance - Renewal Support - New Support - Renewal Services Services - Perpetual Training Other Hardware Parent Item Note: The Item Categories custom list is locked and cannot be edited. Perpetual items are not renewed and are paid in full up front. Examples of perpetual items are License - Perpetual, Services - Perpetual, Trainings, Hardware, and Other. For a perpetual item to appear on a renewal contract record, it must be accompanied by a corresponding maintenance item on the original contract. Both the perpetual item and the maintenance item must belong to the same product line. On a renewal contract record, perpetual items are listed in the Perpetual Contract Items field on the Contract Items subtab. Term-based items have start and end dates, and must have the Term/Contract Pricing Type field set to Monthly or Annually to be priced correctly in new and renewal transactions based on the Term In Months of the transaction line. Examples of term-based items are License - Term, Support - New, Support - Renewal, and Services. Term licenses are always renewed. Maintenance entitlements include software updates and support, are associated with perpetual licenses, and are always renewed. Support entitlements provide support for software only, are associated with term licenses, and are renewable.
Quantity Type	Select the quantity type that defines this item's units. The quantity type affects the renewal behavior of an item. Important: The Quantity Type must match the selected Item Category for the item. An incorrect combination may cause unprocessed renewals for the item. The following quantity types are available: Product License – This refers to core licensed items. You should have at least one product set up in your account per product line. A product license creates a Product and an Install Base record to represent a new sale. A follow-on sale creates an Install Base record tied to the existing Product record. Product License quantity type is used for items under the following item categories: License - Perpetual License - Term Services Module License – This refers to add-on items related to products. A module license cannot exist without a corresponding Product, and should not be sold this way. Module License quantity type is used for items under the following categories: License - Perpetual License - Term Services M/S Entitlement – This quantity type is used for items with item category of maintenance or support. Maintenance and support items require start and end dates that are a key part of the renewals automation. If the Require License for M/S Items (Renewal) preference is enabled, transactions with an M/S item must also have an item with a license quantity type for it to be processed for renewal. User License - Production, User License - Other – This represents the seats sold for the products and modules within the product line. Production Users can be differentiated from Other Users for reporting purposes. User License quantity type is used for items under the following item categories: License - Term Training CPU License – This refers to the number of Central Processing Units or CPU Cores that are licensed to the customer. CPU License quantity type is used for items under the following item categories: Hardware License - Term Other – This quantity type can be used for any item that does not fit in any of the preceding quantity types.
Renew With	Select an item to replace the current item when it is renewed. This setting is for renewable items only, that is, items with an item category of License - Term, Maintenance, or Support. Often, an item is renewed with itself, but you can choose any item in this field. You can also use this setting for versioning. For example, Version 1 can renew with Version 2.
Maintenance/Support Type	For maintenance or support items, if you offer tiered maintenance or support, choose the tier in this field. For information about maintenance and support types, see Setting Up Maintenance/Support for Contract Renewals.
Maintenance/Support %	This field shows the percentage price of the maintenance or support type that you selected.
Opt-Out M/S	Check this box if this item is not considered when calculating the cost of support or maintenance. For example, you do not count a sandbox license when determining the cost of support.
Replaced With	If the item has an end of life date after which it is no longer offered, choose the item that replaces the current item. The item you select here is added to future renewals in place of the item you are entering.
End of Life Date	Enter the date after which this item is no longer offered.
End of M/S Date	Enter the date after which support and maintenance will no longer be offered for this product. This is often some time after the end of life date.
Renewals Exclusion	Check this box if you do not want this item to be renewed.
M/S Pricing Option	If you are creating a maintenance or support item, select the pricing option that you want to use to determine the M/S item price. When you are creating a new item record, this field defaults to the value that you selected in the Default M/S Pricing Option preference. For more information, see Setting Up Contract Renewals Preferences. When you use this M/S item on transactions, the pricing option that you set on the item record is saved on the transaction and on the generated contract item record. If you set this field to blank, the value in the Default M/S Pricing Option preference will be applied whenever this item is used on contracts. If the item is set to renew with itself, the stored M/S Pricing Option value on the contract item record will be used for the renewal item. If the item is set to renew with a different item, the M/S Pricing Option value on the item record for the Renew With item will be used for the renewal item.

Field Name

Description

Term/Contract Pricing Type

Select a contract pricing type for the item. The contract pricing type determines how the rate will be calculated for an item.

The following contract pricing types are available:

Monthly – Item price entered on the Pricing subtab is treated as a monthly price.
Annually – Item price entered on the Pricing subtab is treated as an annual price.
Actual Item Price – Item price entered on the Pricing subtab is considered as the actual rate. If you select this option, the term will not be considered in the rate calculation.
Not Applicable – Select this option if none of the other options are applicable for the item. For example, for Perpetual Licenses or non-renewing items.

Product Line

Choose which product line this item belongs to. A product line is a family of items that are organized around one flagship product. For more information, see Setting Up Product Lines for Contract Renewals.

Item Category

Select the item category where this item should be included in. The item category determines whether an item is renewed and also when it is billed.

The following item categories are available:

License - Perpetual
License - Term
Maintenance - New
Maintenance - Renewal
Support - New
Support - Renewal
Services
Services - Perpetual
Training
Other
Hardware
Parent Item

Note:

The Item Categories custom list is locked and cannot be edited.

Perpetual items are not renewed and are paid in full up front. Examples of perpetual items are License - Perpetual, Services - Perpetual, Trainings, Hardware, and Other. For a perpetual item to appear on a renewal contract record, it must be accompanied by a corresponding maintenance item on the original contract. Both the perpetual item and the maintenance item must belong to the same product line. On a renewal contract record, perpetual items are listed in the Perpetual Contract Items field on the Contract Items subtab.

Term-based items have start and end dates, and must have the Term/Contract Pricing Type field set to Monthly or Annually to be priced correctly in new and renewal transactions based on the Term In Months of the transaction line. Examples of term-based items are License - Term, Support - New, Support - Renewal, and Services. Term licenses are always renewed.

Maintenance entitlements include software updates and support, are associated with perpetual licenses, and are always renewed. Support entitlements provide support for software only, are associated with term licenses, and are renewable.

Quantity Type

Select the quantity type that defines this item's units. The quantity type affects the renewal behavior of an item.

Important:

The Quantity Type must match the selected Item Category for the item. An incorrect combination may cause unprocessed renewals for the item.

The following quantity types are available:

Product License – This refers to core licensed items. You should have at least one product set up in your account per product line.

A product license creates a Product and an Install Base record to represent a new sale. A follow-on sale creates an Install Base record tied to the existing Product record. Product License quantity type is used for items under the following item categories:
- License - Perpetual
- License - Term
- Services
Module License – This refers to add-on items related to products. A module license cannot exist without a corresponding Product, and should not be sold this way. Module License quantity type is used for items under the following categories:
- License - Perpetual
- License - Term
- Services
M/S Entitlement – This quantity type is used for items with item category of maintenance or support.

Maintenance and support items require start and end dates that are a key part of the renewals automation. If the Require License for M/S Items (Renewal) preference is enabled, transactions with an M/S item must also have an item with a license quantity type for it to be processed for renewal.
User License - Production, User License - Other – This represents the seats sold for the products and modules within the product line. Production Users can be differentiated from Other Users for reporting purposes. User License quantity type is used for items under the following item categories:
- License - Term
- Training
CPU License – This refers to the number of Central Processing Units or CPU Cores that are licensed to the customer. CPU License quantity type is used for items under the following item categories:
- Hardware
- License - Term
Other – This quantity type can be used for any item that does not fit in any of the preceding quantity types.

Renew With

Select an item to replace the current item when it is renewed. This setting is for renewable items only, that is, items with an item category of License - Term, Maintenance, or Support.

Often, an item is renewed with itself, but you can choose any item in this field. You can also use this setting for versioning. For example, Version 1 can renew with Version 2.

Maintenance/Support Type

For maintenance or support items, if you offer tiered maintenance or support, choose the tier in this field. For information about maintenance and support types, see Setting Up Maintenance/Support for Contract Renewals.

Maintenance/Support %

This field shows the percentage price of the maintenance or support type that you selected.

Opt-Out M/S

Check this box if this item is not considered when calculating the cost of support or maintenance. For example, you do not count a sandbox license when determining the cost of support.

Replaced With

If the item has an end of life date after which it is no longer offered, choose the item that replaces the current item. The item you select here is added to future renewals in place of the item you are entering.

End of Life Date

Enter the date after which this item is no longer offered.

End of M/S Date

Enter the date after which support and maintenance will no longer be offered for this product. This is often some time after the end of life date.

Renewals Exclusion

Check this box if you do not want this item to be renewed.

M/S Pricing Option

If you are creating a maintenance or support item, select the pricing option that you want to use to determine the M/S item price.

When you are creating a new item record, this field defaults to the value that you selected in the Default M/S Pricing Option preference. For more information, see Setting Up Contract Renewals Preferences.

When you use this M/S item on transactions, the pricing option that you set on the item record is saved on the transaction and on the generated contract item record. If you set this field to blank, the value in the Default M/S Pricing Option preference will be applied whenever this item is used on contracts.

If the item is set to renew with itself, the stored M/S Pricing Option value on the contract item record will be used for the renewal item. If the item is set to renew with a different item, the M/S Pricing Option value on the item record for the Renew With item will be used for the renewal item.

Specify the item price on the Pricing subtab.

Note:
When you enter pricing for percentage based maintenance and support items, you must set the base price to zero so that pricing is calculated correctly.

If you use the Project Management feature, be sure to enter a base price on the service item record or enter zero (instead of leaving the Base Price field blank) if the service item does not have a base price. For information about setting the base price of a service item see, Setting Up Item Pricing. For more information about the Project Management feature, see Using Project Management.
Enter values in the fields on the other subtabs as you would in a standard item form. For more information, see Creating Item Records.

If you use the Advanced Billing and Advanced Shipping features and you do not want to fulfill orders, be sure to clear the Can be Fulfilled/Received box on the Preferences subtab for items that you include in contracts.

You must not use kits or assemblies for renewable software items because these item types do not include the derived information required to generate contract items. You can, however, use item groups to make entering transaction line renewable items easier. For more information about item groups, see Item Groups.

To set up items for Contract Renewals

Related Topics