Advanced Pricing Terms
Advanced Pricing Terms allow you to negotiate, and capture agreed price changes over the term of a subscription before activating the subscription.
The agreed price changes can be a fixed value or a value based on indexes such as Customer Price Index, Producer Price Index, Wholesale Price Index, Employment Cost Index, and House Energy Index. Although the values of these indexes might not be known for future periods, they can still be incorporated as price changes by specifying them as variable names or by using formulas that contain these variable names.
The variables representing such indexes can be factored into the adjustment value of a price adjustment. The price adjustment is created from the Advanced Pricing Term. Advanced Pricing Terms (Price Escalation) capture the price changes that occur over the period of the subscription. These price changes can be periodic changes for a specific term in the subscription. This enables multiple periodic changes within the term of the subscription, similar to having multiple pricing terms, with the added flexibility of using adjustment variables to determine the actual value of the adjustment when the value of the variable becomes known.
Track Price Adjustment Variables
The variables representing pricing indexes are maintained through a setup UI available in Subscription Configuration. A Track Price Adjustment Variables link is available from Subscription Configuration > Subscription Rules, which opens the interface used to maintain pricing index variables.
In this interface, you can enter an index and define its values by start and end date. The interface supports Add Row, Delete Row, and QBE querying.
The list page displays the variables that represent pricing indexes. Multiple date-effective values can be defined for each variable. After a price adjustment variable is created, it can't be deleted, but it can be updated.
Consumer Price Index Adjustments
A new adjustment category Consumer Price Index (CPI) Adjustments enables the use of CPI index types in charge adjustments. CPI index availability is filtered by subscription and product dates. For example, indexes that end before the product start date aren't displayed, while indexes with open-ended end dates remain available.
If the effective dates of a price adjustment partially overlap with the validity of a CPI index, the CPI is applied for the overlapping period and billing lines might be split respectively.
CPI setup data can also be loaded through Import Management (export or import) and through REST services. The same validations apply when loading CPI data through these interfaces.
Define Price Escalations for Charges
Advanced Pricing Terms (Price Escalation) are enabled for recurring and usage charges. When Enable Price Escalation is selected, a View Price Escalation link appears. Selecting this link enables you to enter price escalations or define multiple pricing terms.
Price escalations can be defined either as a fixed percentage for each pricing term or as an expression that references price adjustment variables.
When pricing term details are provided, price escalations are evaluated and applied for each pricing term. If pricing term details aren't provided, the escalation is applied once. If the escalation type is Fixed, bill lines including price escalations are generated until the product end date. If the escalation type is Expression, bill lines including price escalations are evaluated and applied until the current pricing term. If an expression value can't be evaluated, the price adjustment isn't applied, and the scheduled process displays a warning.
Pricing Term and Escalation Attributes
| Column Name | Meaning | Example |
|---|---|---|
| Sequence Number | Sequence number for the pricing term or price escalation record. | Whole numbers only |
| Escalation Name | User-defined name for the escalation record. | Price adjustment negotiated for year 2027 |
| Escalation Start Date | Start date for applying the price escalation. | Any date within the subscription term |
| Escalation Start Offset Duration | Offset duration from the start date of the subscription product. Mutually exclusive with Escalation Start Date and required if Escalation Start Offset Period is entered. | Whole number |
| Escalation Start Offset Period | Offset period from the start date of the subscription product. Mutually exclusive with Escalation Start Date and required if Escalation Start Offset Duration is entered. | Time unit |
| Escalation End Date | End date when the price escalation stops. | Date within subscription term |
| Escalation End Offset Duration | Offset duration from the Escalation Start Date. Mutually exclusive with Escalation End Date and required if Escalation End Offset Period is entered. | Whole number |
| Escalation End Offset Period | Offset period from the Escalation Start Date. Mutually exclusive with Escalation End Date and required if Escalation End Offset Duration is entered. | Time unit |
| Escalation Type | Specifies how the price escalation is calculated. | Fixed or Expression |
| Escalation Value | Required when escalation type is Fixed. | Percentage value |
| Expression | Required when escalation type is Expression. | {CPI-U-101}+{CPI-S-101}-1.5 |
| Pricing Term Duration | Duration for which the pricing term price change applies. | Whole number |
| Pricing Term Period | Required if Pricing Term Duration is entered. | Time unit |
| Pricing Term End Date | Date when pricing term evaluation stops. | Date within subscription term |
| Pricing Term End Offset Duration | Offset duration for the pricing term applied from the Escalation Start Date. | Whole number |
| Pricing Term End Offset Period | Offset period for the pricing term applied from the Escalation Start Date. | Time unit |
| Charge Name | Charge to which the price escalation or pricing term applies. | Recurring or usage charge |
| Next Term Start Date | Start date for the next pricing term to be evaluated. | |
| Next Apply Date | Date when the next price change will be applied. |
Generate Price Adjustments from Escalations
When price escalations use expressions, evaluation and application of adjustments for future terms are performed by the Generate and Apply Price Adjustments from Price Escalations scheduled process.
The scheduled process generates price adjustments when escalation types use expressions that must be evaluated using price adjustment variable values. The process can be run for a specific Business Unit, Customer, Subscription Profile, Subscription Number, or Subscription Product, or any combination of these parameters.
Additional Behavior and Considerations
Advanced Pricing Term is available only in the Redwood UI. Price escalations are translated into date-effective charge adjustments when bill lines are generated.
If renewal is performed, the price escalation is copied but might not be applied when the renewal price adjustment is Reprice, because the adjustment might not be eligible for the new charges.
If Advanced Pricing Term is enabled for a product:
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Bill TCV can't be entered
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Bill Immediately can't be selected
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Early Termination Fee isn't applicable
Basic pricing terms and Advanced Pricing Terms (Price Escalation) can't both be enabled for the same product.
Price escalations can be entered only when the subscription is in Draft status, but they can still be applied when the subscription becomes Active based on expression evaluation.