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Overage Smoothing Charge Model

Overage smoothing charge models are useful for avoiding spikes and troughs in Usage Charges in any given month. The two models of smoothing are Rolling Window and Rollover. Smoothing is defined on Usage Charges at the Product Rate Plan level. 

Smoothing models can help your customers avoid paying too much if their usage spikes in any one period by considering usage over multiple periods. For example, the rolling window model carries over unused units to the next period.

Configuration Options

You can define the overage smoothing charge model when you Create Product Rate Plan Charges in Zuora UI or create ProductRatePlanCharge objects in Zuora SOAP API. 

You must specify the following options when you define an overage smoothing charge model:

  • Smoothing Model: The smoothing charge models, Rolling Window and Rollover.
  • Number of Periods: The number of periods to carry over the unused usage. Each period is equal to the billing frequency.
  • Overage Option when Smoothing: Rolling Window only. Select the overage option to apply when performing smoothing:
    • Apply overage at the end of smoothing period
    • Apply overage as soon as it occurs
  • Option for Unused Included Units: Rolling Window only. This option becomes available if you select Apply overage as soon as it occurs. It allows you to specify whether you want to credit unused units. If you credit unused units, you can then specify the amount of money to credit per unit, in your default currency. We recommend that you specify the prices for all the currency types that are specified in the List Price field. If you activate other currency types later, we also recommend you specify the prices of the newly activated currencies for the unused usage.

Allowed Changes When Amending Subscriptions

You can only change the Included Units and Number of Periods options on a rate plan charge from either the Zuora user interface or through SOAP API with the following conditions:

  • You are making an Add Product or Update Product amendment.
  • The product includes a Usage Charge of the Overage Pricing charge model.
  • For the Zuora SOAP API, you can only change IncludedUnits and NumberOfPeriods with a single create() or amend() call. You cannot change the options when using an update() call.

You must be on WSDL version 54.0 or higher to use this SOAP feature. See Zuora WSDL for information about downloading the current version.

For the Rolling Window model, the following table describes the additional changes allowed on subscription amendments.

Overage Option when Smoothing New Product Amendment Update Product Amendment

Apply overage as soon as it occurs

Can override both Number of Periods and Included Units

Cannot override Number of Periods or Included Units

Apply overage at the end of smoothing period

Can override both Number of Periods and Included Units

Can override both Number of Periods and Included Units

Rolling Window

The Rolling Window model takes into account the low-usage and high-usage periods. It spreads the usage over a smoothing period longer than a billing period.

The rolling window starts on a certain date and rolls forward based on the billing period. It calculates the total usage for the smoothing periods and compares it to the base total. If the total usage exceeds the base total in the smoothing period, the period is reset at the end of the smoothing period and a new window begins. 

How the rolling window works depends on the overage options you choose. The following table describes how the rolling window works with the two overage options.

Overage Option No overage in Smoothing Period Overage in Smoothing Period Billing for the Overage Charge

Apply overage as soon as it occurs

See example for more information.

The rolling window is reset to a new smoothing period starting from the next billing period. The unused usage is expired.

The rolling window is not reset to a new smoothing period until the end of the current smoothing period.

You can bill for the overage on-demand rather than waiting until the end of the smoothing period.

See On-Demand Usage Rating for more information.

Apply overage at the end of smoothing period

See example for more information.

The rolling window is reset to a new smoothing period and moves forward to the next billing period. The unused usage rolls into the next billing period and expires after a specified period.

You can bill for the overage at the end of the smoothing period.

Example Scenarios for Rolling Window

Suppose you provide a monthly service:

  • $50 per month includes up to 500 minutes free talk each month.
  • If the usage exceeds 1500 minutes in a three-month period, pay overage $0.1 per minute.

You can set the following rate plans for your service:

  • Create a recurring rate plan and set the flat rate of $50 per month.
  • Create an overage monthly rate plan.
    • Set Included Units to 500 minutes.
    • Set List Price to $0.1.
    • Select Month from the Billing Period list.
    • Select Rolling Window from the Smoothing Model list.
    • Type 3 in the Number of Periods field.
    • Select an option in the Overage Option When Smoothing area.

If a customer subscribes your service for a year, the charges will vary according to the overage option you choose. The following two examples show how the rolling window works with these two overage options.

Example: Rolling Window with the Apply Overage as soon as it Occurs Option

This example shows how the rolling window works if you select Apply overage as soon as it occurs as the overage option and you do not want to credit unused units. 

With this overage option and the example scenario for rolling window, there are four smoothing periods: January - March, April - June, July - September, and October - December. 

The following table lists the usage for the customer in a year:

Month Units in Plan Usage Month in Smoothing Period Current Usage Total Overage Action Notes

January

500

700

January

700

0

None

No overage

February

500

200

January, February

900

0

None

No overage

March

500

333

January, February, March

1233

0

Reset

No overage. The total usage (1233) is based on the usage during January (700), February (200), and March (333).

Because there is no overage, the window is reset at the end of the three-month period (January - March).

The unused units are expired at the end of the period.

April

500

1000

April

1000

0

None

No overage 

May

500

600

April, May

1600

100

None

The total usage (1600) exceeds the base total (1500). Extra 100 units ($10) are charged in May.

You can bill for the overage on-demand rather than waiting until the end of this three-month period (April - June).

June

500

900

April, May, June

2500

900

Reset

Because the base total has already been used in May, extra 900 units ($90) are charged in June.

You can bill for the overage on-demand rather than waiting until the end of this three-month period (April - June).

The window is reset at the end of the three-month period (April - June).

July

500

0

July

0

0

None

No overage

August

500

90

July, August

90

0

None

No overage

September

500

160

July, August, September

250

0

Reset

No overage. The total usage (250) is based on the usage during July (0), August (90), and September (160).

Because there is no overage, the window is reset at the end of the three-month period (July - September).

The unused units are expired at the end of the period.

October

500

600

October

600

0

None

No overage

November

500

750

October, November

1350

0

None

No overage

December

500

1100

October, November, December

2450

950

Reset

The total usage (2450) exceeds the base total (1500). Extra 950 units ($95) are charged in December.

You can bill for the overage on-demand rather than waiting until the end of this three-month period (October - December).

The following table lists the overage charges and their corresponding service periods:

Service Period Quantity Total

05/01/2015 to 05/31/2015

100

$10

06/01/2015 to 06/30/2015

900

$90

12/01/2015 to 12/31/2015

950

$95

Example: Rolling Window with the Apply Overage at the end of Smoothing Period Option

This example shows how the rolling window works if you select Apply Overage at the end of Smoothing Period as the overage option.

With this option and the example scenario for rolling window, the window moves forward to the following month if there is no overage in a smoothing period.

The following table lists the usage for the customer in a year:

Month Units in Plan Usage Month in Period Current Usage Total Overage Action Notes

January

500

700

January

700

0

None

No overage

February

500

200

January, February

900

0

None

No overage

March

500

333

January, February, March

1233

0

Move forward

No overage. The total usage (1233) is based on the usage during January (700), February (200), and March (333).

Because there is no overage in this three-month period, the window moves forward to the following month. The next smoothing period is February - April.

April

500

1000

February, March, April

1533

33

Reset

The total usage (1533) exceeds the base total (1500). 

Extra 33 units ($3.3) are charged at the end of this period (February - April).

The window is reset at the end of this period and the next smoothing period is May - July.

May

500

600

May

600

0

None

No overage

June

500

1200

May, June

1800

300

None

The total usage (1800) exceeds the base total (1500). 

Extra 300 units ($30) are charged at the end of this period (May - July). You cannot bill for the overage charge in June.

July

500

0

May, June, July

0

300

Reset

Extra 300 units ($30) occurred in June but the overage charge is billed at the end of this period (May - July).

The window is reset at the end of this period and the next smoothing period is August - October.

August

500

90

August

90

0

None

No overage

September

500

160

August, September

250

0


None

 

No overage

October

500

600

August, September, October

850

0

Move forward
 

No overage. The total usage (850) is based on the usage during August (90), September (160), and October (600).

Because there is no overage in this three-month period, the window moves forward to the following month. The next smoothing period is September - November.

November

500

750

September, October, November

1510

10

Reset

The total usage (1510) exceeds the base total (1500). 

Extra 10 units ($1) are charged at the end of this period (September - November).

The window is reset at the end of this period and the next smoothing period is December.

December

500

1100

December

1100

600

Reset

Because the subscription ends in December, there is only one-month period on this window.

The total usage (1100) exceeds the base total (500).

Extra 600 units ($60) are charged at the end of this period.

The following table lists the overage charges and their corresponding service periods:

Service Period Quantity Total

02/01/2015 to 04/30/2015

33

$3.3

05/01/2015 to 07/31/2015

300

$30

09/01/2015 to 11/30/2015

10

$1

12/01/2015 to 12/31/2015

600

$60

Rollover

The rollover model carries unused units forward from one period to another, and expires them if they are not used by the end of the rollover period. You can specify the number of periods that the unused usage can be retained in the Number of Periods optionFor example, if a cell phone plan allows you 500 minutes of usage per month, and has a 6-month rollover period, then you get to "keep" any minutes you haven't used in a particular month, but you must use them within six months otherwise they automatically expire. 

In Zuora, roll overs are automatically reset at subscription renewals. The usage balance is reset to zero when a subscription renews, irrespective of the number of units rolled over until the renewal date.

Example of Rollover

Suppose you provide a monthly service:

  • $50 per month includes up to 500 minutes free talk each month.
  • The unused minutes from the monthly plan allowance can roll over to the following months.
  • If the usage exceeds the monthly plan allowance, pay overage $0.1 per minute.

You can set the following rate plans for your service:

  • Create a recurring rate plan and set the flat rate of $50 per month.
  • Create an overage monthly rate plan.
    • Set Included Units to 500 minutes.
    • Set List Price to $0.1.
    • Select Month from the Billing Period list.
    • Select Rollover from the Smoothing Model list.
    • Type 3 in the Number of Periods field.

The following table lists the usage for a customer who subscribes your service for a year:

Month Units in Plan Usage Month in Period

Unused Units in the Rollover Period

Overage Action Notes

January

500

450

January

50

0

None

The unused units (50) roll over to February.

February

500

600

January, February

0

50

Reset

The usage in February (600) exceeds the total units that can be used (550).

Extra 50 units ($5) are charged at the end of this period.

The window is reset at the end of this rollover period (January -February).

The next rollover period is: March-May. 

March

500

450

March

50

0

None

The unused units (50) rolls over to April.

April

500

450

March, April

100

0

None

The unused units (100) rolls over to May.

May

500

1000

March, April, May

0

400

Reset

The usage in May (1000) exceeds the total units that can be used (600).

Extra 400 units ($40) are charged at the end of this period.

The window is reset at the end of this rollover period (March - May).

June

500

450

June

50

0

None

The unused units (50) rolls over to July.

July

500

450

June, July

100

0

None

The unused units (100) rolls over to August.

August

500

450

June, July, August

150

0

None

The unused units (150) rolls over to September.

September

500

450

July, August, September

150

0

None

The unused units (150) rolls over to October. The unused units in June (50) are expired.

October

500

450

August, September, October

150

0

None

The unused units (150) rolls over to November.The unused units in July (50) are expired.

November

500

1000

September, October, November

0

350

Reset

The usage in November (1000) exceeds the total units that can be used (650).

Extra 350 units ($35) are charged at the end of this period.

The window is reset at the end of this rollover period (September - November).

 

December

500

660

December

0

160

Reset

The usage in December (660) exceeds the total units that can be used (500).

Extra 160 units ($16) are charged at the end of this period.

The following table lists the overage charges and their corresponding service periods:

Service Period Quantity Total

02/01/2015 to 02/28/2015

50

$5

05/01/2015 to 05/31/2015

400

$40

11/01/2015 to 11/30/2015

350

$35

12/01/2015 to 12/31/2015

160

$16

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