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How do I set up a per user pricing model?

Overview

Many subscription businesses utilize a per user pricing model.  For example, a SaaS application provider might want to charge a business subscriber for each user of its application (for example, $5.99 per user per month), rather than simply charging a flat fee (for example, $50/month for unlimited application usage).

Per user pricing is worth considering if your subscribers frequently start small but increase their users significantly over time – in this case, per user pricing entices new subscribers with a low initial price tag, and then you can capture more revenue from each subscriber as they derive value from your offering and add more users.  

Solution

With Zuora's powerful product catalog, it is simple for any subscription business to set-up per user pricing by utilizing the per unit charge model.  Here are the steps involved:

Step 1: Add User Unit of Measure

Out of the box, Zuora provides the following labels as units of measure that can be used for per unit charges: Each, License, and Minutes.  For per user charges, you will want to add User as an additional unit of measure within your Zuora tenant:

  1. Log in to Zuora with your user name and password.
  2. Using the top right navigation bar, navigate to Settings > Z-Billing Settings > Customize Units of Measure.
  3. If you do not see User as a unit of measure on the Customize Units of Measure page, use the add new uom button to add it. Be sure to check the Active checkbox and set the Decimal Places to 0.

You will only have to perform this step one time within your Zuora tenant.

Step 2: Make Sure Per Unit Pricing is Enabled

Charging your subscribers on a per user basis involved using the Per Unit Pricing model within Zuora.  You'll need to make sure this pricing model is enabled in your Zuora tenant:

  1. Log in to Zuora with your user name and password.
  2. Using the top right navigation bar, navigate to Settings > Z-Billing Settings > Enable Charge Types / Models.
  3. On the resulting page, make sure Per Unit Pricing is checked in the Enable Charge Models section.

 You will only have to perform this step one time within your Zuora tenant.

Step 3: Incorporate Per User Pricing into Your Product Catalog

Finally, for each product rate plan where you want per user pricing, you will need to add a per user charge.

  1. Log in to Zuora with your user name and password.
  2. Using the Product Catalog link in the left navigation bar, navigate into the product and scroll down to the product rate plan where you want to offer a per user charge (or create a new product and rate plan in the Product Catalog if you do not have one already). See Product Catalog for more information about products and rate plans in the Product Catalog.
  3. Under the One-Time Charges or Recurring Charges / Period section of your rate plan (depending on the type of per user charge you want to add), click + add new.
  4. In the section of the page that expands, specify values for the following:
    • Charge Name: Add a descriptive name for this charge (for example, create a recurring charge named Project Pro Monthly Per User Fee).
    • Description: Optionally, add a description.
    • Charge Model: Select Per Unit Pricing to charge a variable, per user price.
    • List Price: Specify the dollar amount that you want to charge.
    • UOM: Select the User UOM that you created earlier.
    • Default Qty: Specify a default quantity. You have the option to override this default value when adding this charge to a subscription.
    • Billing Period (for Recurring Charges): Select the period in which recurring charges will be incurred by customers for this plan (for example, every month)
  5. Click save to save this rate plan information.
  6. Repeat these steps for every per user charge you want to add. 

That's it!  You now have per user charges within rate plans of your product catalog. When you now add one of these rate plans to any customer's subscription or amend the rate plan within a subscription, you will be able to enter / edit the number of users being purchased by that subscriber, and Zuora will automatically calculate the total charge based upon the per user pricing you have specified.

Last modified
12:10, 21 Feb 2015

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