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Recurring charge for different initial and renewal terms

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Recurring charge for different initial and renewal terms

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This article explains how to set up a recurring charge using the subscription term as the billing period and a list price based on a month. This type of recurring charge setup lets you create subscriptions with different initial and renewal terms.

This scenario explains how to set up a recurring charge to handle subscriptions with a different initial term and renewal term, and a list price based on a month. Suppose you have the following scenario:

  • Your customer subscribes to service with an initial term of 6 months and a renewal term of 12 months.
  • You want to bill and collect payment for the entire initial term at the start of the term. For example, if the initial term is May 1 through October 31 (6 months), the customer receives an invoice that includes a charge of $600  upon the term start date of May 1.
  • You want to bill and collect payment for renewal term at the start of the term. For example, if the renewal term is November 1 through October 31 (12 months), the customer receives an invoice that includes a charge of $1200 upon the term start date of November 1.

Using full-term pricing options, you can create a recurring charge on your product rate plan with:

  • A billing period based on the subscription term
  • A list price based on a month

Enable Zuora Billing settings for the billing period and list price base

You must enable full-term pricing by defining your Invoice Period Settings. These steps show the required settings for full-term pricing. You can specify other Invoice Period settings as required for your business needs.

See Define Billing Periods for more information on all billing period settings.

Navigation: Click your username at the top right and navigate to Billing > Define Billing Periods

  1. Log in to the Zuora application with administrative priviledges.
  2. Click your username at the top right corner and click Billing and then click Define Billing Periods.
  3. Select Subscription Term from the Custom Billing Periods section. This option lets you define a billing period as a subscription term.
  4. Select Per Month from the Customize List Price Base section. This option sets your list price based on a month. 

Create a product using full-term pricing options

Navigate to Products > Product Catalog in the left-hand navigation section. Then, create a new product in your product catalog and create a new rate plan.

The following  example shows a product rate plan charge that is set up for recurring charges with subscription term as the billing period and a list price based on a month:

Shows the List Price and List Price Base fields.

Do the following from your product rate plan:

  1. Add a new Recurring Charge.
  2. Define the charge amount:
    • Charge Model: Flat Fee Pricing
    • List Price: $100 with the list price base option of Month. For example, if your subscription term is 6 months, the charge for the full-term is $600. If your subscription term is 12 months, the charge for the full-term is $1200. 
  3. Choose a Trigger Condition.
  4. Choose Billing Period: Subscription Term
  5. Choose a Billing Day.
  6. Choose Billing Period Alignment: Align to Charge 
  7. Save the charge.

Create a subscription

Navigate to Customers > Subscription in the left-hand navigation section to create a subscription. See Create a Subscription for detailed steps on how to create a subscription.

The following example shows a subscription with an initial term set to 6 months and a renewal term set to 12 months:

Subscription with a 7-month Initial Term and 12-month Renewal Term

Do the following to see the impact on the invoicing:

  1. Activate and save the subscription. 
  2. Renew the subscription term.
  3. Preview the subscription with a preview date set after the start of the renewal term.