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Usage Flat Fee charges

While configuring rate plans and subscriptions for a customer I was asked when one would use the flat fee usage charge versus a recurring flat fee.  As I understand it, the usage flat fee bills monthly, doesn't require a usage record and will bill each period.  Unlike a recurring charge, it does not count as MRR and you can filter it as usage when running a billing run.  In addition, the timing of the usage flat fee would be in arrears verus the recurring fee which bills from teh start of the billing period, on the bill cycle day.

 

So, why would one use a usage flat fee instead of a recurring flat fee?

Sean Ralph CPA CA
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Zuora Support Moderator

Re: Usage Flat Fee charges

@sralph - I think it's easiest if we think define the terminology a bit first.

 

There are three different types of charges:

  • One-Time
  • Recurring
  • Usage

Within each charge type, there can be different charge models used depending on what you're trying to do (see Charge Models link at the bottom for more info).

 

In your customer's case, you're asking why would anyone use the usage flat fee vs recurring flat fee.

 

Think of the recurring flat fee something used for a product or service that is billed on a periodic basis.

The usage flat fee is used to track a product or service that needs to be counted/metered and billed after the fact.

 

For example:

 

Recurring flat fee = Cupcake Subscription ($25.00)

Each month, the customer receives a box of cupcakes.

 

Usage flat fee = Sprinkles Topping ($5.00)

Each month, the customer has the option of adding this sprinkle topping to their cupcakes, but we're not sure if the customer will add do it or not.

 

So in January, they ended up ordering the sprinkles.

A usage file will be loaded to account for that flat fee charge for the sprinkles. This charge will be billed in arrears after the sprinkles have been consumed already.

 

In February, they don't use the sprinkles, so no usage file is loaded.

 

The charges would look like this:

 

January:

Cupcake recurring fee: $25.00

 

February:

Cupcake recurring fee: $25.00

Sprinkles usage from January: $5.00

 

As you noted, only the recurring flat fee will be counted in the MRR calculation, as usage charges and one-time charges are not part of that formula.

 

Apologies for the example. I couldn't think of anything else off the top of my head except dessert. If anyone else has a better analogy or example, please feel free to share!

 

Good reference pages:



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Re: Usage Flat Fee charges

Thanks @AmyLy   mmm...cupcakes :-)

 

To clarify...I set up a rate plan with a single usage charge "Cupcake of the Month (COTM)" .  It is a flat fee item and will bill each month in arrears. There is no usage load required.  Customer subscribes to a monthly plan effective 1-Oct-2016.  The 1-Nov invoice will bill for the October cupcake fee (no usage load required)

 

Key difference between this and a recurring charge:

 

1) No MRR value as this is considered usage

2) Usage could be billed separately from recurring charges.

3) Usage for partial periods either bills or it doesn't depending on the billing rules setting.  No proration of the charge amount like a recurring charge.

 

i.e. if someone subscribes to COTM on October 26th, the 1-Nov invoice is the full fee instead of 6/31 x COTM fee.

 

 

Sean Ralph CPA CA
Zuora Support

Re: Usage Flat Fee charges

If you have selected the "Flat Fee Pricing" charge model for a Usage charge, it will charge the fix fee in each charge period regardless of actual usage. You do not have to upload the usage for the billing and even if you upload a usage file, it will not consider the usage quantity provided in the file.

 

The setting "Do not process usage charges without usage records” does not apply for the Flat Fee Pricing.






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