Ratio Bundle

Note: This topic is not applicable for the health insurance business.

In case of a ratio bundle, pricing is not defined at the bundle level. Instead, pricing is defined separately for each price item in the bundle.

A ratio expresses the magnitude of quantities relative to each other. It has two factors - Numerator and Denominator. For ratio bundle, the ratio of price item quantities is used to determine the rate for volume based pricing. To determine within which range of ratio limit does the price item utilization falls, the ratio of price item quantities is used. Once the range limits are determined, the rate specified for that range is applied to the quantity of the price item used. Let us understand this with the help of an example.

Bundle X, which is a ratio bundle, contains the following price items:

  • Price Item A - It has been added to the bundle using the price item relationship type as Numerator. It has the following tiered pricing defined in the system:

    Quantity Range Rate ($) per unit
    0 - 0.6 4
    0.6 - 0.9 3
    0.9+ 2

  • Price Item B - It has been added to the bundle using the price item relationship type as Numerator. It has the following tiered pricing defined in the system:

    Quantity Range Rate ($) per unit
    0 - 0.6 5
    0.6 - 0.9 4
    0.9+ 3

  • Price Item C - It has been added to the bundle using the price item relationship type as Denominator. It has the following tiered pricing defined in the system:

    Quantity Range Rate ($) per unit
    0 - 0.6 3
    0.6 - 0.9 2
    0.9+ 1

Now, when the user consumes 500 units of Price Item A, 2500 units of Price Item B, and 4000 units of Price Item C, the system calculates the ratio of price item quantities (i.e. (500+2500)/4000=0.75). Once the ratio is calculated, the system determines the range of each price item within which the ratio (i.e. 0.75) falls. In this case, the ratio falls in the 0.6 - 0.9 range of Price Item A, B, and C. Therefore, the system uses $3, $4, and $2, respectively, as the rate for calculating charges (i.e. ((500*3)=1500, (2500*4)=10000, and (4000*2)=8000).

If the multi parameter based pricing feature is enabled, you can determine the price item utilization in a ratio bundle based on multiple parameters. For example:

Bundle X Country Currency
Price Item A US USD
Price Item B Germany USD
Price Item C England USD

Price Item A, Price Item B, and Price Item C are added in Bundle X. Price Item A, Price Item B, and Price Item C utilization in Bundle X is determined based on two parameters - Country and Currency. Before you add price item to a ratio bundle, you need to define these parameters in the system. Once you define these parameters, you need to associate them to the price items (i.e. Price Item A, Price Item B, and Price Item C) and then add these price items to the bundle (i.e. Bundle X).

While adding Price Item A to Bundle X, you need to set the following price item parameters:

  • Country - US

  • Currency - USD

Similarly, you need to add Price Item B to Bundle X with Country set to Germany and Currency set to USD, and Price Item C with Country set to England and Currency set to USD.

The following table lists the tiered pricing defined for Price Item A:

Tier Sequence Rate Tiering Criteria Price Item Price Item Parameters From To
10 5 Number of Transactions Bundle X 0 1.75
20 4 Number of Transactions Bundle X 1.75 2.50
30 3 Number of Transactions Bundle X 2.50

The following table lists the tiered pricing defined for Price Item B:

Tier Sequence Rate Tiering Criteria Price Item Price Item Parameters From To
10 5 Number of Transactions Bundle X 0 3.5
20 4 Number of Transactions Bundle X 3.5

The following table lists the tiered pricing defined for Price Item C:

Tier Sequence Rate Tiering Criteria Price Item Price Item Parameters From To
10 2 Number of Transactions Bundle X 0 2.0
20 1 Number of Transactions Bundle X 2.0

Now, when the user performs 5000 transactions (in USD) of Price Item A in US, 6000 transactions (in USD) of Price Item B in Germany, and 5000 transactions (in USD) of Price Item C in England, the system creates three billable charges - one for each price item (i.e. Price Item A, Price Item B, and Price Item C). The system calculates the ratio of transactions with the following combinations and then determines the range of each price item within which the ratio (i.e. 2.2) falls:

  • Price Item A, US, USD

  • Price Item B, Germany, USD

  • Price Item C, England, USD

In this case, the ratio falls in the 1.75 - 2.50 range of Price Item A, the 0 - 3.5 range of Price Item B, and in the 2.0 - Infinite range of Price Item C. Therefore, the system uses $4, $5, and $1 as the rate for calculating charges (i.e. (5000*4)=20000 , (6000*5)=30000 , and (5000*1)=5000).

You can also add a price item more than once in a ratio bundle with different set of parameters. For example:

Bundle X Relationship Type Country Currency
Price Item A Numerator US USD
Price Item A Numerator England USD
Price Item B Numerator Germany USD
Price Item C Denominator England USD
Price Item C Denominator US USD

In this case, the system calculates the ratio of transactions with the following combinations and then determines the range of each price item (i.e. Price Item A, Price Item B, and Price Item C) within which the ratio falls:

  • Price Item A, US, USD

  • Price Item A, England, USD

  • Price Item B, Germany, USD

  • Price Item C, England, USD

  • Price Item C, US, USD