Billing engine supported scenarious

Introduction

This article guides Seller Admins in configuring billing logic for invoice calculation. It explains how to set up Event Type, First Period, Final Period, and Changes During Period rules with practical calculation examples. Understanding these configurations helps ensure accurate billing for various subscription scenarios including cancellations, quantity changes, and different commitment periods.

In this article:

• Available billing configuration rules
• Scenario 1: No proration on cancellation (monthly commitment)
• Scenario 2: No proration on cancellation (annual commitment with monthly billing)
• Scenario 3: No proration on quantity reduction (monthly commitment)
• Scenario 4: Highest quantity billing for full month
• Scenario 5: Quantity changes calculated in next invoice
• Scenario 6: Quantity changes calculated in current invoice

Sellers can configure billing logic on Offers for invoice calculation through specific configuration rules.

Available billing configuration rules

The billing engine supports several configuration options that control how charges are calculated for different events.

Event Type rules

The following Event Type rules are available for Offers:

• None - Standard processing of all events
• Next Day - Events processed on the following day
• Ignore Cancellation event - Cancellations do not trigger prorated charges
• Ignore Quantity Decrease event - Quantity reductions do not trigger prorated charges
• Ignore Cancellation and Quantity Decrease events - Neither cancellations nor quantity reductions trigger prorated charges

Period-based rules

Configuration options for First Period, Final Period, and Changes During Period:

First Period options:

• Free - No charge for the initial period
• Prorate - Charges calculated proportionally based on days used
• Full Month Original Quantity - Full month charge using initial quantity
• Full Month Full Quantity - Full month charge using final quantity in the period

Last Period options:

• Free - No charge for the final period
• Prorate - Charges calculated proportionally based on days used
• Full Month Original Quantity - Full month charge using initial quantity
• Full Month Full Quantity - Full month charge using final quantity in the period

Change During Period options:

• Prorate - Charges calculated proportionally based on days used
• Full Month Original Quantity - Full month charge using initial quantity
• Full Month Full Quantity - Full month charge using final quantity in the period

Scenario 1: No proration on cancellation (monthly commitment)

This scenario allows Customers to cancel subscriptions according to Commitment Period terms without prorated charges for unused days.

Configuration

To achieve this behavior, configure Ignore Cancellation event on the Offer. The billing engine will calculate prorated charges for quantity increases or decreases but will not calculate prorated charges when subscriptions are cancelled.

Example calculation

Invoice Date: 1st of each month

Customer purchases a Subscription with 1 License and monthly commitment on August 3rd for 10 EUR.

On August 6th, Customer changes quantity to 15 Licenses.

On August 17th, Customer cancels the Subscription.

September 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: August 3rd
• Charge End date: August 5th
• Amount: 10 EUR / 31 days × 3 days × 1 License = 0.97 EUR

Invoice line 2:

• Charge type: Purchase Fee
• Charge Start date: August 6th
• Charge End date: September 2nd
• Amount: 10 EUR / 31 days × 28 days × 15 Licenses = 135.48 EUR

October 1st billing:

No invoice lines generated.

Scenario 2: No proration on cancellation (annual commitment with monthly billing)

This scenario applies to annual commitments with Monthly Billing, where cancellations do not result in prorated charges for unused days.

Configuration

Configure Ignore Cancellation event on the Offer. The billing engine will calculate prorated charges for quantity changes but not for cancellations.

Example calculation

Invoice Date: 1st of each month

Customer purchases a Subscription with 1 License and Annual Billing commitment on August 3rd for 10 EUR.

On September 6th, Customer changes quantity to 15 Licenses.

On October 17th, Customer cancels the Subscription.

September 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: August 3rd, 2023
• Charge End date: September 2nd, 2023
• Amount: 10 EUR × 1 License = 10 EUR

October 1st billing:

Invoice line 1:

• Charge type: Cycle Fee
• Charge Start date: September 3rd, 2023
• Charge End date: September 5th, 2023
• Amount: 10 EUR / 30 days × 3 days × 1 License = 1.00 EUR

Invoice line 2:

• Charge type: Cycle Fee
• Charge Start date: September 6th, 2023
• Charge End date: October 2nd, 2023
• Amount: 10 EUR / 30 days × 27 days × 15 Licenses = 135 EUR

November 1st billing:

Invoice line 1:

• Charge type: Cycle Fee
• Charge Start date: October 3rd, 2023
• Charge End date: November 2nd, 2023
• Amount: 10 EUR × 15 Licenses = 150 EUR

Scenario 3: No proration on quantity reduction (monthly commitment)

This scenario ensures Customers are charged for the full quantity even when reducing License count during the Billing Period.

Configuration

Configure Ignore Quantity Decrease event on the Offer. The billing engine will calculate prorated charges for quantity increases but not for quantity decreases.

Example calculation

Invoice Date: 1st of each month

Customer purchases a Subscription with 5 Licenses and monthly commitment on August 3rd for 10 EUR per License.

On August 6th, Customer changes quantity to 15 Licenses.

On August 17th, Customer changes quantity to 8 Licenses.

September 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: August 3rd, 2023
• Charge End date: August 5th, 2023
• Amount: 10 EUR / 31 days × 3 days × 5 Licenses = 4.84 EUR

Invoice line 2:

• Charge type: Purchase Fee
• Charge Start date: August 6th, 2023
• Charge End date: August 16th, 2023
• Amount: 10 EUR / 31 days × 11 days × 15 Licenses = 53.22 EUR

Invoice line 3:

• Charge type: Purchase Fee
• Charge Start date: August 17th, 2023
• Charge End date: September 2nd, 2023
• Amount: 10 EUR / 31 days × 17 days × 15 Licenses = 82.26 EUR

October 1st billing:

Invoice line 1:

• Charge type: License Fee
• Charge Start date: September 3rd, 2023
• Charge End date: October 2nd, 2023
• Amount: 10 EUR × 8 Licenses = 80 EUR

Scenario 4: Highest quantity billing for full month

This scenario charges Customers for the full month using the highest quantity of Licenses during that month, regardless of when the increase occurred.

Configuration

To achieve this behavior, configure the following on the Offer:

• Change During Period: Full Month Full Quantity
• First Period: Full Month Full Quantity
• Last Period: Full Month Full Quantity

Example calculation

Invoice Date: 1st of each month

Customer purchases a Subscription with 5 Licenses and monthly commitment on August 3rd for 10 EUR per License.

On August 6th, Customer changes quantity to 15 Licenses.

On August 17th, Customer changes quantity to 8 Licenses.

September 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: August 3rd, 2023
• Charge End date: September 2nd, 2023
• Amount: 10 EUR × 15 Licenses = 150 EUR

October 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: September 3rd, 2023
• Charge End date: October 2nd, 2023
• Amount: 10 EUR × 8 Licenses = 80 EUR

Scenario 5: Quantity changes calculated in next invoice

This scenario delays prorated charge calculations until after the Subscription period has ended.

Configuration

Configure the Offer with Pay In Advance set to True and Billing Period set to Subscription Period. Prorated charges for quantity changes will be calculated in the subsequent invoice after the period completes.

Example calculation

Invoice Date: 1st of each month

Customer purchases a Subscription with 5 Licenses and monthly commitment on August 15th for 2 EUR per License.

On August 25th, Customer changes quantity to 15 Licenses.

September 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: August 15th, 2023
• Charge End date: September 14th, 2023
• Amount: 2 EUR × 5 Licenses = 10 EUR

October 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: September 15th, 2023
• Charge End date: October 14th, 2023
• Amount: 2 EUR × 5 Licenses = 10 EUR

November 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: October 15th, 2023
• Charge End date: November 14th, 2023
• Amount: 2 EUR × 15 Licenses = 30 EUR

Invoice line 2:

• Charge type: Correction Fee
• Charge Start date: September 15th, 2023
• Charge End date: October 14th, 2023
• Amount: 13.33 EUR
  • 2 EUR / 30 days × 10 days × 5 Licenses = 3.33 EUR
  • 2 EUR / 30 days × 20 days × 15 Licenses = 20.00 EUR
  • Total correction: 3.33 + 20 - 10 = 13.33 EUR

Scenario 6: Quantity changes calculated in current invoice

This scenario calculates prorated charges immediately in the current invoice when quantity changes occur.

Configuration

Configure the Offer with Pay In Advance set to False and Billing Period set to Subscription Period. Prorated charges for quantity changes will be calculated in the current invoice.

Example calculation

Invoice Date: 1st of each month

Customer purchases a Subscription with 5 Licenses and monthly commitment on August 15th for 2 EUR per License.

On August 25th, Customer changes quantity to 15 Licenses.

September 1st billing:

Invoice line 1:

• Charge type: Purchase Fee
• Charge Start date: August 15th, 2023
• Charge End date: September 14th, 2023
• Amount: 2 EUR × 5 Licenses = 10 EUR

October 1st billing:

Invoice line 1:

• Charge type: License Fee
• Charge Start date: September 15th, 2023
• Charge End date: September 25th, 2023
• Amount: 2 EUR / 30 days × 10 days × 5 Licenses = 3.33 EUR

Invoice line 2:

• Charge type: License Fee
• Charge Start date: September 25th, 2023
• Charge End date: October 14th, 2023
• Amount: 2 EUR / 30 days × 20 days × 15 Licenses = 20 EUR

November 1st billing:

Invoice line 1:

• Charge type: License Fee
• Charge Start date: October 15th, 2023
• Charge End date: November 14th, 2023
• Amount: 2 EUR × 15 Licenses = 30 EUR

Summary

The billing engine offers flexible configuration options to accommodate various business models and billing requirements. By understanding and properly configuring Event Type rules, First Period, Last Period, and Changes During Period settings, Seller Admins can ensure accurate invoice calculations that align with their business policies. Whether you need to prevent proration on cancellations, charge for the highest quantity used, or control when quantity changes are reflected in invoices, these configuration options provide the necessary control.