How To Configure Tiered Pricing

Overview

This pricing method allows you to create a product that has tiered pricing depending on the usage threshold that you configure.

 

Procedure

Step 1. Create a new product.

Go through the motion of creating a new product by referring to the How To Create A New Product section. Choose a rating method that makes sense to have tiered pricing such as Usage, One Time Charge, Subscription, etc.

 

Step 2. Specify the rate details

You have the ability to skip defining the default rate for the product for later definition when provisioning to a customer or when it is added to a package as a package product. For the purpose of this process, we will define the default rate for the product that you created.

Click the Specify Default Rate checkbox and select "Tiered Pricing" for the Pricing Type.

Finally, enter the rate corresponding to the currency code that the product will be used for, considering the pricing bands for your tiered product.

Refer to table 1 below for the field definitions to help you populate the rate details.

 

Click Submit to save the changes.

 

Terms Defined

Table 1
Field Name Description
Tiered Rate Type

Only applicable for Tiered Pricing, this allows for choosing the behavior of how usage data is handled for tiered rates. Available choices are:

  • Bulk: Applies the rate of the final tier to all the usage units. Rating of the usage happens when the invoice is closed.
  • Incremental: Applies the rate for usage allocated to each tier respectively. Also if this is the tiered rate type selected, the system rates usage as they are received.
Tier Calculation Level

Only applicable for tiered pricing, this indicate the aggregate level of the tiered rates. Available options are:

  • Package: Calculates aggregation within the package. If multiple products within the package, instances of the package product will be aggregated instead of handling each package product on its own.
  • Product: Calculates aggregation at the usage that belongs to the same product instance.
  • Account: Calculates aggregation at individual levels of hierarchy if account is part of hierarchy.
  • Invoice: Calculates aggregation for all instances of the product on the invoice.
  • Custom: This allows for the definition of custom aggregation rules. This opens the Tier Calculation Grouping that will allow entry of aggregation points using the object reference model.
Tier Calculation Grouping  A table that allows the selection of fields relative to the ACTIVITY entity using the object reference model. Tier calculation will be aggregated/grouped according to unique values of the field(s) defined in this table. As long as there is a link from the ACTIVITY entity to the desired grouping field/entity, it can be referenced.
Use Tier Price as Flat Rate

Setting Flat Rate flag will price the activity at a flat rate of a tier, without multiplying the rate by the cost. In case of the Incremental pricing the cost of each tier < quantity of rated activity will be added up for final cost. In case of the Bulk pricing only one flat rate will be used based on the corresponding tier for quantity on activity.

Split Usage Crossing Bands

Applicable only if Tiered Rate Type is set to "Incremental". When dealing with large chunks of data, enabling this option will allow the splitting of usage data across bands. Disabling the option will have the large chunk rated against the highest band attained.

Band Billing Component (if different than self)

Use this if the usage data to be tiered is coming from another product. For example, if the tiered product is a phone subscription and you want to influence how much the subscription charge will be for customer based on his/her minutes usage, this field will have the usage product.

Otherwise, the tiered pricing will be based on the usage of the phone subscription product itself.

Pricing Type

Indicates the type of pricing that the product will use. Available options are:

  • Standard Pricing: Specify the rate in currencies configured on the platform. This is the basic per usage unit charge.
  • Tiered Pricing: Specify tiered rates. This enables the flexibility of indicating different rates based on the number of usage units.
Start Date

Pricing plan effective start date.

End Date

Pricing plan effective end date.

Rate

Pricing rate of the product for each band.

Upper Band

This specifies the ceiling on which the band will take effect. For example, if you are charging for a product in such a way that: Usage of 0 - 100 is charged at 0.1, then 101 - 500 at 0.07, and then 501 and up at 0.05, the rating band will looking something like:

Currency Upper Band Rate
USD 100 0.1
USD 500 0.07
USD   0.05

Leaving the Upper Band field blank can only be done for the top-most tier. This means that anything in excess of the last band with an upper threshold will be rated using the pricing for the band with a blank Upper Band value.

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