Use Product Pricing Schemes

Each Price Point follows a Pricing Scheme that determines how its cost is calculated from the allocated quantity. Advanced Billing offers four Pricing Schemes for standard Products, plus a fifth for advanced cases. Compare them here to pick the right one.

Comparing pricing schemes

The four standard schemes are:

• Per Unit: Charge the same amount per unit.
• Tiered: Charge a different per-unit price for each quantity range, so a single purchase can span multiple prices.
• Volume Based: Charge a different per unit price, but the price per unit for all units is determined by the prevailing price based on the allocated quantity.
• Stairstep: Charge a total cost based on which quantity range the allocation falls into.
• Hybrid: Combine a Primary Model with a Secondary Model, switching between them once the allocated quantity crosses a threshold. Only available for Quantity-based and Metered Components, and only on sites with Hybrid Pricing enabled.

The examples below use the same bracket information to show how pricing can vary across schemes.

Price bracket rules

To create a Tiered, Volume Based, or Stairstep Pricing Scheme, you must define brackets.

• Brackets may not overlap in quantity.
• Gaps in quantity aren't allowed, though the lowest bracket doesn't need to start at 1.
• Defining infinity: One bracket with a blank "ending quantity" is allowed. A blank value here indicates an unbounded quantity (∞).
• Per unit or per bracket: Prices are given as per unit for the Per Unit, Tiered, and Volume Based Pricing Schemes. Prices for the Stairstep Pricing Scheme are given as a cost for the entire bracket.

Per unit pricing

Enter a cost per unit and you're done.

In a Per Unit Pricing Scheme, prices are defined as per-unit costs, and all units cost the same. Only one price bracket may be defined. If you define a Product for IP Addresses that cost $1 each per period and a customer buys 3, a $3 charge is added at the end of the period.

The cost per unit can go up to 11 decimal points.

Tiered pricing

In the Tiered Pricing Scheme, multiple price brackets define the prices at different quantity levels. Prices are given on a per-unit basis. Your customers pay the defined price per unit for each allocated unit. Say you allow your customers to purchase extra widgets to augment their monthly Plan. The pricing structure is defined as follows:

If a customer buys 10 units, they pay $2 per unit, for a total of $20.

If a customer buys 20 units, they pay $2 each for the first 10 units, plus $1 each for the next 10 units, for a total of $30 (10 x $2 + 10 x $1).

Multiple vs. single price tiers

When viewing invoices for Products that use Tiered Pricing, the unit price displayed depends on how many pricing tiers are present on the invoice:

• Multiple price tiers:
  When more than one price tier applies to a given invoice, the system calculates the unit price as:

  Unit Price = Line Item Amount ÷ Line Item Quantity

  This approach ensures that the displayed unit price reflects the blended rate across all applicable tiers.

• Single price tier:
  When only one price tier applies to the invoice, the system displays the unit price directly from the first tier's Price Point, rather than calculating it. For single-tier invoices, the displayed unit price may differ slightly from an estimated value due to rounding differences, but the total billed amount remains accurate and unchanged.

Volume based pricing

In the Volume Based Pricing Scheme, multiple price brackets define the prices at different quantity levels, much like in the Tiered Scheme. However, unlike the Tiered Scheme, the price per unit for all units is determined by the prevailing price for the allocated quantity. Taking the pricing setup from the earlier example:

If a customer buys 10 units, they pay $2 per unit, for a total of $20.

If a customer buys 20 units, they pay $1 per unit for all units, for a total of $20.

Stairstep pricing

In the Stairstep Pricing Scheme, multiple price brackets are defined, but the pricing is given as a total cost for the whole bracket instead of per-unit costs.

If 10 units are allocated (10 paying customers), the cost is $10 total for this Product.

If 20 units are allocated, the cost is $20 total for this Product.

There's never a charge if the quantity is zero.

Hybrid pricing

Hybrid Pricing combines two of the standard schemes so a Component can bill one way for lower quantities and switch to a different scheme past a threshold.

Hybrid Pricing is only available for Quantity-based and Metered Components, and only on sites with Hybrid Pricing enabled. A Metered Component billed by an event-based metric, meter, or formula can't use Hybrid Pricing.

To set it up, choose Hybrid as the Price Point's Pricing Scheme, then configure two models:

• Primary Model: A Volume Based, Tiered, or Stairstep scheme covering the lower range of quantity. Define its price brackets the same way as when using that scheme on its own, except the final bracket must have an ending quantity — it can't be left open-ended, since that value sets the threshold for the Secondary Model.
• Secondary Model: A Per Unit, Volume Based, Tiered, or Stairstep scheme that takes over once the allocated quantity exceeds the Primary Model's threshold.

For example, if the Primary Model is Tiered with a final bracket ending at 100 units, the Secondary Model's pricing applies starting at unit 101.

Quantity settings

Quantity and Metered Product allocations are represented as whole numbers by default (5 licenses, for example). Checking Enable Fractional Quantities allows you to allocate partial quantities (4.5 minutes, for example). API representations of this Product return a decimal instead of an integer for the quantity values.

Related information

See Understand Products for how Products fit into the Catalog overall.