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CCV calculation in Order to Revenue

Zuora

CCV calculation in Order to Revenue

This article explains the calculation logic of the Charge Contractual Value (CCV) metric in the Order to Revenue feature. Note that the CCV calculation logic of the Order to Revenue feature is different from that of the Billing-Revenue Integration feature. For more information, see CCV calculation in Billing-Revenue Integration.

Overview

CCV is the estimated cumulative sum of all invoiced or to-be-invoiced charges against a rate plan charge upon booking, inclusive of any proration. CCV is generated when a subscription is created, and it can be updated during the subscription lifecycle.

CCV is calculated based on the billed amount and the unbilled preview amount for each charge segment at the booking time. For more information, see General logic of CCV calculation and CCV calculation examples. To understand how CCV is calculated for evergreen subscriptions, see CCV calculation for evergreen subscriptions.

CCV can be updated throughout the subscription lifecycle due to the following order actions or amendments, as in the table below:

Amendment Types

Order Actions

CCV Calculation

 

Create Subscription

Calculated for all charge segments

Add Product

Add Product

Calculated for the new charge segment created

Update Product

Update Product

Calculated for the new and original impacted segment

Remove Product

Remove Product

Calculated for all the impacted charge segments

Renew Subscription

Renew Subscription

Calculated for the new renewed charge segments

Cancel Subscription

Cancel Subscription

Calculated for all the impacted charge segments

Owner Transfer

Owner Transfer

Calculated for all the charge segments

Suspend and Resume

Suspend and Resume

Calculated for all the impacted charge segments

Terms and Conditions

Terms and Conditions

Calculated for all the impacted charge segments

 

Change Plan

Calculated for all the impacted charge segments

Change Order from Pending to Active

Change Order from Pending to Active

Calculated for all the impacted charge segments

Expectations

In the following scenarios, the CCV amount might differ from the actual invoice amount:

  • Applying account-level discounts
  • When you set the Billing Day to Default from account, if you change the Billing Cycle Day (BCD) set on the account, the impact on CCV will be reflected only in the next version of the subscription. Also, when you change the billing rules, the impact on CCV will be reflected only in the next version of the subscription.
     

    If you regenerate the booking transactions, CCV will be recalculated for the current subscription version using the latest BCD and billing rules.

General logic of CCV calculation

The CCV of a rate plan charge consists of two components: the Billed Amount from the charge’s billing documents (such as invoices and memos) and the Preview Amount for any unbilled portion of the charge, as shown in the following diagram:

The calculation logic of the CCV metric for a rate plan charge

Indicators for CCV calculation

The CCV calculation is dependent on the following indicators:

  • The fields of a Rate Plan Charge object, including but not limited to the following:
    • Charge Type
    • Charge Model
    • Price Table
    • Quantity
    • Start Date
    • Charged Through Date
    • End Date
    • Billing Cycle Day
    • Billing Timing
    • Billing Period Alignment
    • Validity Period Information
    • Tax Code
    • Tax Mode
  • Tenant-level or account-level settings in Zuora Billing, including the following

Supported tax engines

Zuora Revenue requires the tax to be excluded from CCV because the tax amount does not impact the revenue. Therefore, even if the Tax Mode setting is set to Tax Inclusive for product rate plan charges in Zuora Billing, the tax amount is excluded from the charge price to derive the correct CCV in Zuora Revenue. If the tax rate is changed in Zuora Billing, Zuora Revenue will calculate the CCV based on the new tax rate. The tax rate date is the subscription term start date.

The following tax engines are currently supported by the Order to Revenue feature. For other tax engines, the CCV calculation will result in zero.

The preview amount portion of the CCV is always calculated based on the latest tax rate.

CCV calculation examples

A customer subscribes to your product for 12 months, from January 1, 2024, to December 31, 2024. The subscription includes a monthly Per Unit charge, for 10 units each month, with a price of $5 per unit. The billing date for the subscription is set to use the customer account’s billing cycle date (BCD): the 1st of each month.

The CCV is generated as below when this subscription is created:

Charge

Segment

Version

CCV

Start Date

End Date

C-0000001

1

1

Billed amount: 0
Preview amount: 10 * 5 * 12 = 600.00
Total CCV = 0+600 = 600

2024-01-01

2024-12-31

After the billing occurs on January 1, the invoice amount is generated as follows:

Charge

Segment

Version

Invoice Number

Invoice Amount

Start Date

End Date

C-0000001

1

1

INV-001

50

2024-01-01

2024-01-31

On February 1, your customer's BCD is updated to the 15th of each month, and the invoice for February is subsequently generated as follows. Note that the change of the billing date to the 15th of each month means that this invoice only covers the charge fee for the period from February 1 to February 14.

Charge

Segment

Version

Invoice Number

Invoice Amount

Start Date

End Date

C-0000001

1

1

INV-002

50*14/29 = 24.13

2024-02-01

2024-02-14

On March 15, the subscription was updated to increase the monthly units from 10 to 13. This change creates a new charge segment and accordingly, the CCV is generated as follows:

Charge

Segment

Version

CCV

Start Date

End Date

C-0000001

1

2

Billed amount: 50+ 24.13 = 74.13

Preview amount: 10 * 5 * 1 = 50

Total CCV = 74.15+50 = 124.13

2024-01-01

2024-03-14

C-0000001

2

2

Billed amount: 0

Preview amount: 13 * 5 * (9 +  17/31) = 620.65

Total CCV= 0+ 620.65=620.65

2024-03-15

2024-12-31

Suppose your customer's BCD remains unchanged as of the 1st of each month; for the subscription update on March 15, the CCV is generated as follows:

Charge

Segment

Version

CCV

Start Date

End Date

C-0000001

1

2

Billed amount: 50+50=100

Preview amount: 10 * 5 * 14/31 =22.58

Total CCV= 100 + 22.58=122.58

2024-01-01

2024-03-14

C-0000001

2

2

Billed amount: 0

Preview amount: 13 * 5 * (17/31 + 9) = 620.65

Total CCV= 0+ 620.65=620.65

2024-03-15

2024-12-31

View CCV

You can use one of the following methods to view CCV: