Consumption-based Products
Overview
This document guides you through creating and managing consumption-based products and add-ons.
In consumption-based billing, users are billed for the units they consume, calculated at the end of the subscription period.
The consumption is submitted at the end of the consumption period (subscription commitment period). by the seller or the broker.
It covers the steps to set up new metered products, how to configure their details, and how to manage them over time.
It also details the different billing logic setups, with detailed examples and calculations.
In a consumption-based billing cycle, you pay for the previous period.
Key Terminologies for Consumption-Based Product
Minimum Quantity: This ensures that if no usage data is submitted by the end of the billing period, a predefined minimum quantity is automatically applied. This baseline quantity is then used to generate the bill, guaranteeing a minimum charge regardless of actual usage.
Bill for Initial Period: A seller can adjust historical consumption data after the next billing date has passed. They can also charge for the initial period within the subscription settings.
Steps Involved in Creating a Consumption-based Products
Log in to your seller account.
Navigate to Services > Custom Services.
Create a new service (or) if you chose a pre-existing service, navigate to Actions > Products.
Click on Create.
Select Consumption based on the billing model after selecting the product type as Recurring billing.
Once all the fields are filled, click Create to add the product to your portfolio.
Examples for Consumption-based Billing
Monthly Billing with Variable Consumption
Example: A monthly subscription with a billing cycle starting on the 25th of each month and a sales price of 100 €/unit is created on February 25th. On March 25th, the consumption is submitted as five units, and on April 25th, it is submitted as three units.
Timeline and Calculations:
25.02: Subscription is created.
25.03: Consumption submitted as 5 units.
25.04: Consumption submitted as 3 units.25.03: 5 units * 100€ = 500€
25.04: 3 units * 100€ = 300€Monthly Billing, Minimum Quantity Applied
Example: For a monthly subscription with a billing cycle starting on the 25th of each month, a sales price of 100 €/unit, and a minimum quantity of 2 units, the subscription is created on February 25th. On March 25th, no consumption is submitted, and on April 25th, the consumption is submitted as 4 units.
Timeline and Calculations:
25.02: Subscription is created.
25.03: No consumption submitted.
25.04: Consumption submitted as 4 units.25.03: 2 units (min quantity) * 100€ = 200€
25.04: 4 units * 100€ = 400€Monthly Billing, Add-ons Inheriting Minimum Quantity
Example: For a monthly subscription with a billing cycle starting on the 25th of each month, a sales price of 100 €/unit, a minimum quantity of 2 units, and an add-on price of 50 €/unit, the subscription is created on February 25th with an add-on. On March 25th, no consumption is submitted, and on April 25th, the consumption is submitted as 3 units for the subscription and 1 unit for the add-on.
Timeline and Calculations:
25.02: Subscription is created with add-on.
25.03: No consumption submitted.
25.04: Consumption submitted as 3 units for subscription and 1 unit for add-on.25.03: (2 (minimum quantity) * 100€) + (2 (add-on minimum quantity)
* 50€) = 200€ + 100€ = 300€
25.04: (3 * 100€)+(1 * 50€) = 300€ + 50€ = 350 €Cancellation with Final Billing
Example: For a monthly subscription with a billing cycle starting on the 25th of each month and a sales price of 100 €/unit, the subscription is created on February 25th. The subscription is canceled on March 13th, but consumption is submitted as 2 units on March 25th.
Timeline and Calculations:
25.02: Subscription is created.
13.03: Subscription is canceled.
25.03: Consumption submitted as 2 units.25.03: 2 * 100€ = 200€