Kapitel 5

Common Scenarios

Pricing for line items and contracts

Subscription Billing Suite is capable of managing different flexible pricing models within an individual contract at the line level. A common scenario for software, hosting, and telecom companies is having multiple charges within an individual contract covering the one-time costs of equipment, the recurring charges for subscription, and metered or tiered charges for data usage. SBS is capable of managing any number of line items all with different pricing models and billing schedules to avoid the need for multiple contracts and lower the chances of error.

Flat pricing model

A company’s pricing model can be as simple as “sign up for our membership/services for as low as $49 a month”. This is a very common example of a recurring billing contract with a monthly subscription charge. SBS automates the recurring billing and simplifies the schedule set up process to eliminate any complexity that you can face while setting this up. However, while it is easy to communicate and set up, the flat price model can be limiting as only customers who find the service desirable at the set price would subscribe to it.

By the end of 2022, 53% of all software revenue will be generated from a subscription model.

Digitalist Magazine

Metered / usage-based pricing

Metered pricing is a type of usage-based pricing that is dependent on the customer’s use of a specific service or product. The classic example of this is utilities. Water and electricity suppliers price their services and bill their customers based on a metered usage amount. However, metering is a very common scenario for cloud hosting and data warehousing companies, too.

An excellent fit for usage-based pricing is telecommunications companies offering minutes of data usage or call time. Telecom companies often need to combine usage-based and flat pricing into one contract which can be complex and error-prone. With Subscription Billing Suite, pricing models can be configured at the line item-level, making this a much easier process.

Milestone Billing

For milestone-based billing, SBS can create schedules preconfigured with the anticipated dates for each milestone to be used for any particular contract. These can include dates such as contract signings, construction starts, a final hold-back, or any other number of events. At each of these milestones, a different percentage of total non-recurring revenue can be billed (e.g. 25% at signing, 35% at construction start … etc.

Milestone billing example
Example of a non-recurring milestone billing with unequal charges, but any combination of milestones and billing percentages is possible with Subscription Billing Suite

Tiered Pricing and Volume Discounts

Tiered pricing is a common strategy for creating consumption incentives for customers through volume-based discounts. While the out-of-the-box ERP is capable of managing basic volume discounts, it cannot handle tiered pricing where a certain threshold must be met before progressing to the next tier and potentially lower price.

Offerings with a measurable consumption such as data storage, number of transactions, and quantity of goods purchased all are valid candidates for this pricing structure.

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