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Percent of Invoiced Amount

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Percent of Invoiced Amount

I'm trying to figure out how to set up a charge that is in effect 'percent of invoiced amount'. This can also be thought of as 'percent of a percent of usage'. For example, let's say that we invoice 5% of usage in USD. I'd like to set up a charge that is 20% of the invoiced amount here, or, in effect, 20% of 5%. This can be simplified to 1% in this example (0.25 * 0.05).

 

This is simple to set up if there is a single usage rate. However, this gets complicated when there is a tiered rate (5% up to 100000 usage, 4% from 100000.01 to 250000, 3% from 250000.01 to 500000 etc). I'd have to do a second rate table I suppose? With graduating tiers and correlating percentages of each tier?

 

Another option here would be to run a Billing Preview, get the invoice number, then insert that invoice number as a usage against the 'percent of invoice' charge. I'm not sure which method is more reliable / scaleable. 

 

I'm trying to figure out how best to set this up so it is low impact to the users. Has anyone solved for this issue before? Any ideas?

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Zuora Staff

Re: Percent of Invoiced Amount

Great question, as you suspect Zuora's usage model isn't currently multi-varient and so what you'd like isn't support OOTB. Also once you go down the path of wanting to charge based on invoice amount you get stuck between a rock and a hard place. The rock is that the invoice amount is an OUTPUT of the billing engine, and the hard place is that you want that output to be another INPUT to the billing engine. If you're doing straightforward per unit usage pricing, you can side step this issue as you describe with a collapsed or condensed derived rate, but this won't work if you want to use tiered flat fee pricing with either the tiered or volume usage pricing options. 

 

But your idea of using the billing preview will work, the preview is reliable and accurate, but an extra call as part of the set up and you'll have to repeat the call every billing frequency (so once a month for monthly billing, once a year for annual billing, etc).

 

Another possible approach is to have a rate plan for each tier, with the 5/4/3% then baked into each tier (1% as in your example for the 5% tier), but the billing preview solution is more flexible in that it'll work with any usage pricing model. I'd argue this multiple rate plan approach is simpler to use once it's set up but there's more product catalog management time needed, both to set up and maintain. But if it makes every deal easy and simpler to understand I'd say it's worth it.

 

Zuora does have plans to make this type of dependent or multi-varient pricing a core Zuora feature (you can do this type of pricing today using our Rules Engine but only if your orders are coming in from Salesforce), but there's no schedule or release date right now.

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Highlighted
Zuora Staff

Re: Percent of Invoiced Amount

Great question, as you suspect Zuora's usage model isn't currently multi-varient and so what you'd like isn't support OOTB. Also once you go down the path of wanting to charge based on invoice amount you get stuck between a rock and a hard place. The rock is that the invoice amount is an OUTPUT of the billing engine, and the hard place is that you want that output to be another INPUT to the billing engine. If you're doing straightforward per unit usage pricing, you can side step this issue as you describe with a collapsed or condensed derived rate, but this won't work if you want to use tiered flat fee pricing with either the tiered or volume usage pricing options. 

 

But your idea of using the billing preview will work, the preview is reliable and accurate, but an extra call as part of the set up and you'll have to repeat the call every billing frequency (so once a month for monthly billing, once a year for annual billing, etc).

 

Another possible approach is to have a rate plan for each tier, with the 5/4/3% then baked into each tier (1% as in your example for the 5% tier), but the billing preview solution is more flexible in that it'll work with any usage pricing model. I'd argue this multiple rate plan approach is simpler to use once it's set up but there's more product catalog management time needed, both to set up and maintain. But if it makes every deal easy and simpler to understand I'd say it's worth it.

 

Zuora does have plans to make this type of dependent or multi-varient pricing a core Zuora feature (you can do this type of pricing today using our Rules Engine but only if your orders are coming in from Salesforce), but there's no schedule or release date right now.

View solution in original post

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Tutor

Re: Percent of Invoiced Amount

Hey Richard - Thank you for a very thoughtful response. Because we have technical resources in-house (read: me), I feel like the Billing Preview method is more flexible as well. My plan was to create a usage, run the preview, obtain an invoice number, then create another usage using that invoice number against the secondary charge. I'd then be OK to perform a full bill run and get an actual invoice number I think.

 

However, we are indeed integrated with Salesforce. Do you have some documentation handy about how to use the Rules Engine to achieve something like this? Is it somehow different than just using the API as I'd planned?