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Best way to handle Perpetual Licenses with Orders

What is the best way to handle perpetual licenses with the new orders metrics.  Currently we are putting them as Evergreen subscriptions but this creates a $0 TCB and TCV value so we are not able to run a report to see what our total contracted billings were for the month.  Is there a different report we should be running in order to see total contracted billings or bookings for the month or is there a better way to set up these perpetual licenses? 

7 REPLIES 7
Zuora Staff

Re: Best way to handle Perpetual Licenses with Orders

In the Zuora world an evergreen subscription by definition has no TCV or TCB since we don't know how long the customer's subscription is going to last. So it looks like an evergreen subscription isn't appropriate for your use case, perhaps a one time charge in a termed subscription is more appropriate? I have a question mark here as I lack some background, for example, is that license genuinely perpetual meaning it's a one time billing that will never re-occur and so you could use a one time charge in a one month termed subscription? Does it get bundled with other things, like support, that do have a term or billing frequency? And so the subscription term is longer, say 12 months, but that license remains a one time fee?

Re: Best way to handle Perpetual Licenses with Orders

To answer your questions:  

 

1) Yes it is a one-time charge that will never reoccur 

2) It does not get bundled with other charges so the subscription would be larger.  

Based on these it seems that the one time charge in a termed subscription woudl allow us to recognize revenue the same way and allow us to see TCB for the charges? 

Zuora Staff

Re: Best way to handle Perpetual Licenses with Orders

That is correct, you can probably just use a termed subscription with initial term of one month, renewal term of one month and with auto-renew off. The sub will only run for one month, you won't need to cancel it and you'll get a TCB and TCV number, though you should really deprecate TCV and use only TCB if you can going forward. 

Master

Re: Best way to handle Perpetual Licenses with Orders

Hi - the way we've done this is just to use a one-time charge for the perpetual licence and then a recuring charge for the monthly support work.  I'd be happy to take you through our solution if it would help.

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Guru

Re: Best way to handle Perpetual Licenses with Orders

@Nigel we do the same with a one time charge added on to the subscription along side the recurring charge.

 

The separate case is when a customer purchases a perpetual license all by itself. We enter this as a one time charge on an evergreen subscription because there is no 'term' associated with the perpetual product. Additionally making up a fake term like 1 month or 12 months would kick off renewal processes when that term comes to a close.

 

Additionally, we allow the purchase of perpetual products to come from other sources than the main subscription. For example the customer may have purchased the base subscription through Reseller X and then purchases a perpetual product directly. This must be placed in a separate subscription so that the invoice owner can be entered accordingly.

Master

Re: Best way to handle Perpetual Licenses with Orders

@feisley We also have a few one time only products, but I think we just ignore the term in that case. Though you've got me wondering now what we do with that - i think everything defaults to 12 months so it'll still be a 12 month subscription but there's nothing to renew.

The way our provisioning works is that it assigns a licence but just doesn't add any "support" to it so that works just fine.

Guru

Re: Best way to handle Perpetual Licenses with Orders

The issues I was referring to with the 12 month term (or any term really) is we have the system setup to send out renewal emails automatically when a termed subscription is nearing its end date.

 

From a provisioning standpoint, ours is similar in that we simply ignore all dates for perpetual items (one time charges). If its present on an account in any form its recognized. (This also means if you actually want to remove a perpetual product, you must do a remove product amendment to wipe it from the subscription. A cancellation of the subscription wont impact perpetual otherwise.