What is a Price Book?
A Price Book allows you to build a pricing scale. It consists of a list of Tiers in which a user can customize quantity ranges and set applicable pricing for units that fall within those defined ranges. Price Books are used when price changes as quantity changes for any Variable Charges (Usage or Count).
Key Characteristics
- Price Books can be used with any Subscription Items that have Usage or Count Charges
- Price Books can be shared across multiple Subscriptions and Customers or customized for an individual contract
- A single Price Book can support multiple currencies
Before you Start
- Price Books always live on the Subscription Item
- Because Price Books handle usage based scenarios, other records, such as the Rate Plan, are required on the Subscription Item. Bear in mind that the ‘Pricing Type Calculation’ and ‘Show Charges by Tier’ fields on the Rate Plan will affect the Price Book Calculations
- This article focuses on how Price Books calculate Rates when Tier Achievement is not in use. If the Rate Plan leverages Tier Achievement, Price Books will calculate differently. See the Tier Achievement article for more information
Pricing Types
Examples of each Pricing Type can be found here.
- Linear
- Linear Pricing is calculated based on the total quantity of Units. The price will be determined by which Tier the total quantity (of either the Charge or a collection of Charges) falls within. The price set for that Tier will be individually applied to all Units at a flat rate.
- Marginal
- Marginal Pricing evaluates the quantity of Units that fall within each Pricing Tier. Only the quantity that falls within a particular “band” will be charged at that rate. The result is a blended rate per Unit, dictated by the quantity allocated to each Tier.
- Fixed Rate Per Tier
- Fixed Rate Per Tier is based on total quantity, but instead of a true rate per Unit, the tier represents a total amount. The total amount is set based on the Tier, and an effective rate is then calculated on the Charge (Amount divided by Charge Quantity).
Pricing Tiers: Lower Limit
The Lower Limit allows you to determine the different “bands” for each Tier. Lower Limits represent the quantity threshold for each Pricing Tier.
- For Linear and Fixed Rate Per Tier Pricing Types, the Lower Limit is included in the Tier.
- A quantity that is greater than or equal to the lower limit will be included in that Tier.
- For Marginal Pricing Types, the Lower Limit represents the last quantity of the previous Tier.
- A quantity must be greater than the lower limit to be included in that Tier.