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Prepaid Item Quantity

Prepaid Item Quantity Rate Types are similar to Fixed (Recurring) & Usage (Variable) Rate Type, but applied differently when handling usage.

The Prepaid Item Quantity Rate Type is used when a set quantity (Included Units) is paid for by the customer upfront, and usage will deplete against that total over a period of time. Unlike Fixed & Usage (Variable) Subscription Items, the included quantity can be depleted over the course of many service periods.

 

rate_types_prepaid_item_qty_subitem.png

 

Use Case Example

Customer has an upfront set quantity and usage will deplete the quantity over many periods.

For example, a customer has purchased 1000 units upfront which are depleted over a six month period.

 

Characteristics

  • The upfront Prepaid fee is on a separate Charge Schedule, and will recur based on that Charge Schedule (see configuration below)
  • The Rate Plan determines how Usage Data will be evaluated and the Rate calculated
  • During Rating, Charges will be created to “Offset” part of the Prepaid Quantity
  • You can choose to set a replenishment schedule for prepaid units (each quarter the customer prepays for X more units)
  • You can also choose to set an expiration interval for Prepaid Units (i.e. “use it or lose it”)

 

Prepaid Item Quantity: Fields Required for Configuration

Optional Fields:

 

Creating a Prepaid Item Quantity Subscription Item

rate_types_prepaid_item_qty_subitem_create.png

  1. Go to your Subscription
  2. Add a Subscription Item under Subscription Items > click New ZAB Subscription Item
  3. Add a Name to the Subscription Item, by default the Item name will populate.
  4. Add an Item Description or leave the defaulted Item Description from the Item Record
  5. Add Start and End Dates, these can differ from the Subscription
  6. Under Rate Type, select Prepaid Item Quantity
  7. Select a Rate Plan
  8. Add a Quantity and Rate if an upfront (prepaid) charge is applicable
  9. Add a Term
  10. Add a number of Units Included with the Subscription Item. (The number of Units the customer is prepaying for)
  11. Add a rate to the Overage/Usage Rate section for the variable portion of your Subscription Item. (This rate will be applied to your Usage once the Prepaid Included Units have been depleted)
    • For example, 500 Units are included in the Prepaid Subscription, but are depleted after the customer has consumed 700 Units. The first 500 Units are offset by the Prepaid Units while the remaining 200 Units are priced at the Overage/Usage Rate.
  12. Set the Replenishment Frequency and Interval. (This determines how often the Prepaid Included Units will be replenished during the life of the Subscription Item)
    • For example, if you have a Prepaid Item Quantity Subscription Item with 100 Units included and set the Replenishment Frequency to 1 and the Interval to Month, a Unit Adjustment Charge with Quantity = 100 units will be created for each month of the contract for the Usage to deplete against
  13. Set the Unit Expiration Frequency and Interval. (This allows you to set an expiration date for Include Units)
    • This determines when (if ever) the Prepaid Units should expire for the Subscription Item. This is often used in conjunction with the Replenishment Interval and Frequency
    • For example, a Prepaid Subscription Item could be set up to have Units replenished every month, but with a caveat that the customer must use the Units within 3 months or else ‘lose’ them. To satisfy this requirement, set the Unit Expiration Frequency to 3 and the Interval to Months.
  14. If a Unit Expiration Date is not set, unused Prepaid Units will roll over to the next period for the life of the Subscription Item. See Use Case here.
  15. Select Proration Type (most applicable when the period starts or ends mid month)
  16. Select a Charge Schedule for the upfront/fixed portion of your Subscription
    • A common scenario for Prepaid Item Quantity is for the upfront Prepaid Charge to be on a yearly Charge Schedule, while the Usage may be rated and billed more frequently
  17. Under Rating Charge Schedule, select a Charge Schedule for the variable portion of your Subscription
    • For Prepaid Item Quantity Subscription Items, Usage is often rated more frequently (i.e. monthly) to account for any activity that would deplete the Included Units specified and evaluated when the customer goes into overage units
  18. Check Rating Bill In Arrears if applicable (optional but recommended)
  19. Add a Prepaid Unit rate for each Included Unit under the Prepaid Item Tab > Prepaid Unit Rate > add a value
  20. Save
  21. (Optional) Test and confirm your configuration
    • Add Usage Data
      • Usage data should correlate with the Rate Plan selected, e.g. if the Rate Plan was configured for Count Based Usage, add ZAB Count Data
    • Once Usage has been added, click the Rate Now Button to generate charges

 

Prepaid Unit Rate

The Prepaid Unit Rate determines the value of each of the Prepaid Included Units. When the Subscription Item is rated and Usage is depleted against the Prepaid Units, the Prepaid Unit Rate determines how each Unit is evaluated. This rate is only used with the Prepaid Item Quantity Rate Type.

 

rate_types_prepaid_item_qty_subitem_prepaid_unit_rate.png

 

1. Prepaid Item Quantity Subscription Configuration
rate_types_prepaid_item_qty_subitem_configuration.png

 

This example highlights the relationship between Included Units and the Quantity and Rate fields. The customer pays $10,000 and receives 500 included units. If all 500 units are depleted, each additional unit is charged at $35 per unit.


The Prepaid Unit Rate is used to calculate the consumption of Usage. Since there are 500 units included at an upfront cost of $10,000, the Prepaid Item Rate could be set to $20, to reflect that the customer paid for each unit they received ($20/unit * 500 units = $10,000 upfront cost).


In some cases a customer may receive a discount for paying for units upfront. For example, a storage company charges $20 per day. However, if the customer prepays for the year, they pay $8,000 and receive 500 days free. The customer is effectively receiving $2,000 of free services by paying in advance (because the Prepaid Unit Rate * Included Units sums to a greater amount than the upfront amount charged).


2. Post-rating snapshot
rate_types_prepaid_item_qty_subitem_post_rating_snapshot.png

 

3. Configuration - Prepaid Item Rate and Usage added
rate_types_prepaid_item_qty_subitem_config_prepaid_item_rate.png


4. Post-rating - The Prepaid Unit Item Rate is $20 per unit
rate_types_prepaid_item_qty_subitem_prepaid_item_rate_post_rating_snapshot.png

 

This post-rating example highlights the following:

  • Unit Adjustment Charge: The number of units included for the specified period (one year)
  • Fixed Charge: The upfront charge of $10,000
  • Offset Charge: Depletes Usage against the Prepaid Units at the Prepaid Unit Rate of $20
  • Usage Charge: Once the Prepaid Included Units are depleted, the Overage/Usage Rate of $35 is applied
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