Edit tiered revenue model pricing

Different pricing configuration options are available for each revenue model (free, one-time, recurring, and tiered). This page explains how to configure pricing for the tiered revenue model. For descriptions of all of the revenue models, see Select revenue models

The tiered revenue model is like the recurring revenue model with the additional benefit of offering customers a choice of prices based on different billing frequencies. An unlimited number of price tiers can be configured with different billing frequencies, pricing structures (for example, flat and price per unit), contract durations and terms, etc. This is most commonly used to define monthly and yearly rates for the same add-on.

On the Prices and Editions tab, the price options are displayed with the add-on:

During checkout, customers choose a price by selecting the associated billing cycle from a drop-down list:

To edit tiered revenue model pricing

Step 1. If you are not already on the Manage Add-On Pricing page, click Live > Products > {productName} | Edit > Connections & Pricing | Pricing. The Manage Add-on Pricing page opens for the selected add-on product. 

Step 2. If you have not already done so, from the Revenue Model drop-down list, select Tiered. The Tiered Price section appears.

The following configuration sections are displayed in the Payment Plans area:

  • Free trial period and Expired free trial grace period (see Edit free trial periods)
  • First pricing structure
  • Flat rate price
  • Price per unit
  • Usage restrictions
  • Dependent setup fee
  • One-time setup fee
  • Contracts
  • Additional pricing tiers

The pricing tiers can be any combination of the above features.

Step 3.  In the Pricing Plan section, select Rank to display this as the primary price for the add-on.

Step 4. In the Pricing Plan section, from the Billing Frequency drop-down list, choose one of the options available. The price(s) you configure in the sections below will be invoiced to the customer at this frequency.

Step 5. Determine which one of the following price options you want to configure for this add-on:

  • Flat Rate Price—The add-on is sold to customers for a flat fee charged at a set frequency. When customers purchase the add-on, quantity is not applicable (they purchase an implicit quantity of one). For example, $5.00 per month for the add-on.
  • Price Per Unit—The add-on is sold to customers at a recurring price per custom-defined unit (for example, megabytes or users) and customers specify how many units they wish to purchase. For example, a customer who selects an extra storage add-on may choose a quantity of 5 megabytes at a price of $5.00 per megabyte per month.
  • Price and Usage Ranges/Restrictions—Instead of a simple Price Per Unit configuration, customers are charged a different price depending on the quantity they purchase (these prices are configured as ranges). For example, $1.00/megabyte per month when a range of 5 to 100 megabytes are purchased, and $0.50 per megabyte per month when more than 100 megabytes are purchased. You can configure an unlimited number of these ranges. Note that with this example, the minimum value in the first range limits customers to purchasing 5 megabytes or more per month.

Proceed to one of the next three steps, depending on your choice.

Step 6. (Optional) Configure flat rate price:

a. If the Flat Rate Price section is not visible, click Add a Flat Rate Price. The section appears.

b. Enter the flat price per {billingFrequency}.

c. Proceed to Step 13.

Step 7. (Optional) Configure price per unit:

a. If the Price per Unit section is not open, click Add Price per Unit. The Price Per Unit area appears.

b. Define the unit type. The default is set as Users, but you can change this to meet your needs. Many unit types are preconfigured, including megabytes, gigabytes, contracts, boxes, data points, and others. To search for the unit type you need, start typing the unit type name in the per field, and options autopopulate.

Note: The unit type you select here is the unit used for the remaining configuration in the Price Per Unit section.

c. Enter the recurring per-unit price to charge per configured unit type.

d. Proceed to Step 11.

Step 8. (Optional) Configure price and usage ranges:

a. If the Price per Unit section is not open, click Add Price per Unit. The Price Per Unit area appears.

b. Define the unit type. The default is set as Users, but you can change this to meet your needs. Many unit types are preconfigured, including megabytes, gigabytes, contracts, boxes, data points, and others. To search for the unit type you need, start typing the unit type name in the per field, and options autopopulate.

Note: The unit type you select here is the unit used for the remaining configuration in the Price Per Unit section.

c. Click Add Usage Restrictions. Min and Max range fields appear.

d. To configure the price per unit for the range, in the box that appears below the currency type, enter the amount per unit for this quantity range (you define the Min and Max of this range in the next step).

e. To define the minimum and maximum number of units for this range, in the Min and Max fields, define the quantity range to which this per unit price (configured in the previous step) will apply.

  • For example, 1-100. This means that the user pays the price indicated in the currency type box above for each of the first 100 megabytes. If the minimum number of megabytes that can be purchased is 5 and this rate is applicable to a maximum of 100 users, the first range is entered as 5-100.
  • One or more ranges can be configured.

e. (Optional) To add another range, click Add another usage range and return to step 8d. 

Step 9. (Optional) Configure these optional settings:

  • Restrict purchases to increments of—Enter a value. You can also accept the default of 1.

This restricts the user to buying the product in specific increments. When you select this option, the input field for customers is converted to a drop-down list. For example, the customer might see a drop-down list of 5, 10, 15, and 20 units.

  • Display price per increment—To enable, select the checkbox and set the minimum quantity to purchase to match the increment. Or, leave the checkbox cleared (the default state) to leave it disabled.

When enabled, this changes the display on the product Pricing & Editions page to reflect the cost based on the minimum number of required units, instead of the price per individual unit. For example, if you set a minimum of 5, and an increment of 5, at $1/user per month, the customer sees a price of $5/5 users per month instead of the normal $1/user per month.

Step 10. (Optional) If you configure two or more usage ranges, an additional field appears: Keep pricing tier with volume. Select it to enable the option. You can also accept the default which leaves it disabled.

In this case, tier refers to a usage price range.

To understand this option, consider this example: Price ranges are configured as follows: For the first 1-10,000 API calls, the price is set at $0 per call, and every call above 10,000 is charged at 10 cents.

  • Checkbox selected—For the first 10,000 API calls, the user is charged $0. However, after the 10,000 call threshold is passed, the user is charged $.10 for every call reported during the billing period, including the first 10,000. So for 10,001 calls, the user is charged $10,001 X $0.10, for a total charge of $1000.10.
  • Checkbox cleared—There is no charge for the first 10,000 API calls. For each API call above the 10,000 threshold, those additional calls are charged at $.10 per call. Therefore, for 10,001 calls, the user is charged $.10.

Step 11. (Optional) Configure these optional Price Per Unit settings if desired.

a. To enable metered usage for this unit type, turn on Metered usage. For example, $5/user based on usage.

b. To enable a setup fee per {unitType}, turn this option on. An additional fee per unit is applied to each unit purchased during the first checkout. For example, a one-time $50 setup fee for each unit.

Step 12. (Optional) Configure another usage rate:

a. Click Include another usage rate. A new Price Per Unit section appears.

b. Return to step 8 to configure the new usage rate.

Step 13. (Optional) Click Add a One Time Setup Fee to activate this optional feature. The One Time Setup Fee section appears. Enter a value.

This fee is only due at the first checkout and is not billed again. Purchases of additional quantities do not incur this fee. If customers cancel and repurchase the add-on, they are charged the one-time setup fee again.

Step 14. (Optional) To enable this optional feature, click Add Contract Terms to display the contract fields. Following is a description of all fields and options on the contract form:

  • Minimum contract duration—The value you enter determines the number of billing cycles during which a customer is under contract. During this period the contract specifications outlined in the contract fields are in effect.
  • Contract fee—The contract fee is a one-time fee that is charged at the beginning of a contract, and when a contract is renewed.
  • Grace period—The value you enter gives users a period of time in which to select a new contract or edition before their product is canceled.
  • Termination fee—Your selection determines the type of termination fee that applies when customers cancel prior to the end of their contract. When you select a percentage-based or flat termination fee, additional fields open, where you must enter the amount and a description. The description you enter here is visible on the customer's invoice.
  • Auto renew by default after the end of the contract period—The option you select is shown to the customer as the default option for what happens at the end of the contract period. The customer can override the default you choose.
  • Cancellation period limit—Customers have the number of days configured to cancel their contract, failing which the contract is renewed with the same conditions and duration.
  • End of contract grace period— When auto-renew is disabled on a contract, this setting gives users a period of time in days during which they can change which edition they are subscribed to without canceling their subscription. This effectively restarts the contract. During the grace period, the subscription becomes inactive. If the user opts in to another edition during that time, the subscription becomes active and access is reinstated. If the user takes no action before the end of the grace period, the subscription is canceled.
  • Block edition upgrades for subscriptions with active contracts—Selecting this option blocks a customer from increasing units or upgrading ranges while under contract. Changes made apply at the end of the contract.
  • Block edition downgrades for subscriptions with active contracts—This blocks customers from decreasing units or downgrading ranges while under contract. Changes made apply at the end of the contract.
  • Block switch to shorter contract—When this option is checked, the user cannot switch to a shorter-length contract, nor to one with no contract.  

Step 15. Configure optional usage settings that are displayed at the bottom of the Recurring Price area, as required. These include:

  • Allow custom metered usage—When enabled, the developer can charge the user for custom metered usage
  • Separate pre-paid order—If metered (postpaid) usage is enabled, this option is available. Enable this to split metered usage billing from prepaid billing. When enabled, separate orders are created for metered and prepaid billing, as are separate invoices: one invoice is generated for pre-paid charges at the beginning of the billing period and another is generated for the metered usage immediately after the billing period ends.

By default, this option is disabled and all items on an order (pre-paid and post-paid) appear on one invoice which is generated at the end of a billing period.

  • Keep billing cycle on usage change—When enabled, the order is put on the same billing cycle. Upon activation, the user pays the prorated amount for the remaining time in the current billing cycle and then pays the full amount at the start of the next billing cycle. For example, if a customer already purchased 5 users at $1/ month and upgrades half-way through the month to 15 users, they owe $5 at the time of upgrade (half of the 10 users) and pay $15 at the start of the next billing cycle.

Step 16.  (Optional) To create another pricing tier, click Add another price. A new Tiered Price pane appears. Return to Step 3 to define the new pricing tier.

Step 17. Click Save Plan to save this configuration. A message confirms that the configuration is saved.

Step 18. Continue to Edit included items.