Overage smoothing charge model

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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.

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.

Overage Rolling Window doesn't count usage records in the partial period into the Included Units.

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. If the end of the billing period lands during the smoothing period, you can bill before the end of the three-month period (April - June) rather than bill at the end the smoothing period.
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. If the end of the billing period lands during the smoothing period, you can bill before the end of the three-month period (April - June) rather than bill at the end the smoothing period. 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. If the end of the billing period lands during the smoothing period, you can bill before the end of the three-month period (October - Decenber) rather than bill at the end the smoothing period.

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 option. For 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.

If a partial period exists at the beginning of a product rate plan charge, rollover does not not apply. It is best practice to create a product rate plan charge with the start date aligning to the billing cycle day so that no partial period exists.

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