In this section, we will discuss advanced pricing models available in Zuora. These charge (pricing) models will enable you to add more sophisticated rate plan charges to the products that you sell.
In addition to some of the basics covered in the previous tutorial, Zuora's Product Catalog provides you with a flexible and configurable way to manage pricing models. One example that sets Zuora apart from others is the ability to support advanced charge models for any level of business complexity.
Unlike alternatives that limit your product rate plans to a single one-time charge and a single recurring charge, Zuora allows you to create an unlimited number of one-time, recurring, and usage-based charges for each rate plan. This flexibility is useful, for example, if you wish to charge both a monthly recurring license fee and an annual recurring support fee for a product that you sell. In addition, Zuora provides capabilities for volume pricing, tiered pricing, usage-based charges, usage-based charges for overage, and discount charge models. Zuora's product catalog is able to grow with your business as its needs become more complex.
Here are some of the key concepts to understand when looking to support more advanced charge models in Zuora:
- Unlimited Charges: Zuora allows you to create unlimited charges for each of your product rate plans. You are not limited to a single one-time charge and a single recurring charge.
- Volume Pricing: Use this model to charge a different per-unit price based on the total quantity a customer purchases.
- Tiered Pricing: This model is similar to volume pricing in that it allows for a different price to be charged based on the quantity purchased. However, tiered pricing applies different unit prices per tier. With a tiered charge model, pricing changes progressively as the volume increases. For example, a total price of a subscription would be the sum of the first 5 units at $10/month each, the next 5 units at $8/month each, and 10 additional units at $5/month each.
- Overage Pricing: Use this model if you want to charge for units consumed after the customer exceeds a defined number of included units. For example, 300 included minutes on a cell phone and then $0.10/minute thereafter.
- Tiered with Overage Pricing: The tiered with overage charge model applies only to usage-based charges. This charge model is similar to the tiered charge model, except there is an overage charge for any units consumed above the ending units of the final tier.
- Delivery Pricing: Use this model if you want to charge your customers in advance for a subscription that includes goods delivered on a recurring basis. This charge model applies to recurring charges only.
- Overage Smoothing charge model: Use this model if you want to avoid spikes and troughs in usage charges in any given month. The use of smoothing models helps customers avoid paying too much if their usage spikes in any one period by considering usage over multiple periods. Some smoothing models, such as "rolling window", carry over unused units to the next period.
- Discount charge model: Use this model to apply a fixed or percentage-based discount on a subscription. You can also define the duration of time that the discount is applied.
- High Water Mark Pricing: Use this model to charge end users only for the highest aggregated quantity of usage consumed on any day during a billing period. The High Water Mark Pricing charge models are available for customers with Enterprise and Nine editions by default. If you are a Growth customer, see Zuora Editions for pricing information.
- Pre-Rated Pricing: Use this model to perform rating externally, by a third-party provider or in-house, and then pass-through the usage records along with the rated amount to Zuora for billing. The Pre-Rated Pricing charge models are available for customers with Enterprise and Nine editions by default. If you are a Growth customer, see Zuora Editions for pricing information.
- Multi-Attribute Pricing: Use this model to define custom objects with pricing data and charge your end users based on a lookup into these custom objects based on additional data passed in on the usage transaction. The Multi-Attribute Pricing charge model is available for customers with Enterprise and Nine editions by default. If you are a Growth customer, see Zuora Editions for pricing information.
Additional resources and activities
To learn more about the charge models in Zuora: