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Rating Process

Zuora

Rating Process

Overview

The rating process calculates the amounts on the invoices you send to your customers. It starts when a bill run is triggered and consists of three phases: 

  1. Initialization
  2. Charge processing
  3. Output generation

1. Initialization

The initialization phase gathers the necessary information to process charges in a subscription. Such information is related to:

  • Tenant and account information
  • Billing settings
  • Subscription charges
  • Usage records if a subscription rate plan has a usage charge

Tenant and account information is essential for determining the correct start and end dates of the billing period for a charge. Visit the following resources to learn more: 

Proration, proportional division, of a charge will happen as a result of certain business actions mid-billing period. How you decide to handle proration will impact the amount you charge your customers in these scenarios. Visit the following resources about configurable billing settings related to proration:

If a subscription charge is based on usage, check the following resources about settings and rating options related to usage charges:

2. Charge processing

After collecting the necessary information in the initialization phase, all the charges in a subscription are ready to be processed. 

The rating process handles the following charge models :

These charge models will have the following charge types:

  • One time charge
  • Recurring charge
  • Usage charge
  • Discount charge: You can create a discount charge to give your customers discounts. This is also included in the rating process.

All charges of a subscription are calculated one after another in a tight loop.

First, a charge processor is selected according to the charge type and charge model. If a charge is of the usage type, usages of the current billing period are picked up for calculation. 

Second, the charge processor calculates the rating result for the current charge segment in the target billing period(s). 

Next, rating begins to process discount charges if there are any. Discounts are implemented as if they are regular charges, but they cannot exist alone. Discounts have to be applied to non-discount charges. 

3. Output generation

After the charges are processed, chargeable events are produced and will be converted to invoice items. Besides chargeable events, the rating process also produces processed usages if the subscription contains usage charges. A processed usage represents a usage that applies to a charge with a rating amount. 

Taken together, chargeable events and processed usages become the inputs for the invoicing process.