TAG LINE
SMALL TITLE

Counting Rules for Tiered Pricing

Last Updated: Sep 04, 2020

Note: This is an advanced topic relating to sophisticated tiered pricing based on multiple combinations of inclusions to determine tier values for advanced pricing.

Glossary:

Term

Description

Tier Count

The current number of things you have, to determine which tier you fall in to

Tier Structure

The collection of tiers set up on an entity, consisting of thresholds, price and rate plan

Counting Rule

The collection of packages or services that will make up the tier count of a package frequency

Outline:

A common use case in many markets is the ability to offer customers different prices for services based on the quantity of services that they purchase.  Typically this means the more they purchase from the customer, the lower the price per service, OR the more usage they incur during a billing period, the lower the price per unit.

Some billing systems provide simplified cases for Tiered Pricing:

  • Within a package, based on service quantity, that service's price can be tiered in the following ways:

    • Tiered By Status - Different tier counts and prices per service status tier

    • Tiered Across Status - Tier counts are shared across all statuses and prices can be set on each status and tier

  • Within a Usage Bucket, a flat charge can be applied per tier of a bucket based on levels of the units (minutes, GB)

These approaches have the following shortfalls:

  • Tiers can only count the service that they're set up on, you can't have multiple services count together to determine a tier.  

    • Additional to this, tiers must count the service they're set up on. You can't have a warranty or service plan be based on the number of other services on the account

  • Tier counts are based on the services of the Package.  Two of the same packages on an account can't count together.  This goes against what many customers set up where counts are based on what an Account has purchased over time.

  • Tier Counts can only be based on services.  Billing scenarios exist where they count the number of packages a customer bought, regardless of quantity of service within each package

  • Usage Rates can differ based on the tier the account is currently in.  Rate Plans need to be set up at the tier level.

  • Tier definitions have to be created from scratch on every Catalog Package.  There is no re-usability.

Enter the concept of Counting Rules:

LogiSense Billing solves these shortfalls by splitting out the tier counting rule from the tier structure on the package frequency.  

Counting Rule Setup:

A counting rule is a collection of catalog packages OR services (not both) and statuses that will contribute to the tier count of a package frequency when attached.  The counting rule will also house the "Count Only if Usage" flag which if selected, will only let services that had usage in the billing period contribute to the count, as well as if the service will be Tier By Status or Tier Across Status. 

Tiered Subscription/Recurring Pricing:

  1. On a Package Frequency, the administrator selects whether the package frequency is tiered or not. If they select tiered, they can attach a Counting Rule to that package frequency.  This will draw the service pricing part of the screen based on the Tier By/Across Status selection of the counting rule.

    The administrator can then set up the tier structure per service and select a price per tier.  It is important to note the service or package set up to have tiered pricing does not have to be in the counting rule.  You could be counting totally different services to determine the tier count of this service.

    1. A simple case, you can have a counting rule set up to count instances of Service A, and attach it to a Package that contains Service A.  Tiered pricing can be set up on Service A, so that based on how many instances of Service A an account has, the price can change based on the tier structure. OR

    2. You can have a counting rule set up to count instances of Package A, and attach it to a Package that contains Service A.  Tiered pricing can be set up on Service A, so that based on how many instances of Package A an account has, the price of the Service can change based on the tier structure.

    3. A slightly more complex case, you can have a counting rule set up to count instances of Service A and Service B, and attach it to a Package that contains Service A.  Tiered pricing can be set up on Service A, so that based on how many instances of Service A and Service B an account has (regardless of package), the price can change based on the tier structure.  Likewise, that counting rule could be applied to another package that contains Service B, so that tiered pricing could be set up on that service too.  In this way the prices and even the tier structure can be different between the two catalog package services, but the Count of services when applied to an account will be the same.

    4. Finally, you can have a counting rule set up to count instances of Service A and Service B, and attach it to a package that doesn't contain either Service A or B (For example, a service plan Package that charges a lower rate based on how much an account buys).  Tiered Pricing can be set up on Service C so its price is dependent on how many of Service A and B an account buys.

  2. Packages can still be sold to accounts as normal.  Tier setup is copied down from the catalog, and can be overridden at the Account Price Plan or Account Package level.  Things that can be overridden at the account level:

    1. Tier Structure (0-10, 11-20, 21+)

    2. Tier Price

  3. During Billing, any Counting Rules that are attached to an Account Package are evaluated based on that account.  In an Account A with a Package X with a counting rule counting instances of Service 1 and Service 2 for all statuses, at the time of Billing, LogiSense Billing counts up all instances of Service 1 and 2 in that account to determine the tier count.  Let's say Service A is in package X.  Using the tier count, we determine the tier that Service A should be billed at based on the tier count, then those instances of Service A are billed based on their status and the tier count.  See the examples below for some more clarity.

Tiered Rates and Aggregates:

Counting rules can also be set up on a rate, if the rate is of type Aggregate.  Aggregate rates will sum up the usage on the service with that rate in order to determine the price per unit (GB, minute, etc).  An aggregate rate with a Counting Rule will use the counting rule to get a count of services or packages on an account, and use that count to determine the price per unit for that rate.

A tiered rate "US1" could have the following setup:  A counting rule summing Service A and Service B is added to a rate.  The rate charged for usage will be

  • $1/GB if there are 0 to 100 of Service A and B on the account

  • $0.75/GB if there are 101-500 of Service A and B on the account

  • $0.60/GB if there are 501+ of Service A and B on the account

Progressive pricing is currently not supported.  

For Bracketed pricing, based on the count of the Counting Rule at the end of the billing period, the price of the rate will be calculated and applied to the usage against that rate.  If Account Z has combined 300 of Service A and B at the end of the Billing Period, any usage that came in using rate US1 would be charged at $0.75 per GB

Examples: 

Example 1 : Plans with tiered pricing on their SIMs.  They would have different packages set up to represent US based SIMs and global SIMs.  The counting rule is established on the combination of US only and global SIMs, but the actual MRC price in each threshold bracket change per SIM.

Active SIMs

Monthly Fee


US Only

US, CA, EU & AU

10000 - 15000

$1.10

$2.25

15001 - 25000

$0.85

$1.95

25001 - 35000

$0.79

$1.70

35001 - 50000

$0.75

$1.55

50 001+

$0.72

$1.40

Billing Scenario 1.1: Account A has 10,000 of the US Only service Active and 10,000 of the global service Active.

Therefore they have 20,000 total so the second tier pricing applies. Charges are 10000 * 0.85 for US and 10000*1.95 for global, leading to a total MRC = 8500 + 19500 = $28000

Billing Scenario 1.2: Account B has 40,000 of the US Only service Active and 1000 of the global service Active.

Therefore they have 41,000 total so the fourth tier pricing applies. Charges are 40000 * 0.75 for US and 1000*1.55 for global, leading to a total MRC = 30000 + 1550 = $31550

Billing Scenario 1.3: Account C has 10,000 of the US Only service Active (7000 with usage, 3000 without)  and 10,000 of the global service Active (7000 with usage, 3000 without). Count is set to count only if usage

Therefore they have 14,000 total so the first tier pricing applies. Charges are 10000 * 1.10 for US and 10000*2.25 for global, leading to a total MRC = 11000 + 22500 = $33500

Billing Scenario 1.4: Account D has 50,000 of the US Only service Active and 50,000 of the global service Active. The Count is based off of the # of US only packages + global packages.  They have 10000 US only packages and 20,000 global packages on the account

Therefore they have 30,000 total so the third tier pricing applies. Charges are 50000* 0.79 for US and 50000*1.70 for global, leading to a total MRC = 39500 + 85000 = $124,500


Example 2: Tiered Across Status. Statuses "Active" and "Pre-Active" count towards the tier count

Active SIMs

Monthly Fee


US Only (Active)

US Only (Pre-Active)

US Only (Suspended)

US, CA, EU & AU (Active)

US, CA, EU & AU (Pre-Active)

US, CA, EU & AU (Suspended)

10000 - 15000

$1.10

$1.00

$0.50

$2.25

$2.00

$2.00

15001 - 25000

$0.85

$0.80

$0.50

$1.95

$1.80

$1.50

25001 - 35000

$0.79

$0.75

$0.50

$1.70

$1.65

$1.50

35001 - 50000

$0.75

$0.73

$0.50

$1.55

$1.45

$1.25

50 001+

$0.72

$0.70

$0.50

$1.40

$1.30

$1.20


Billing Scenario 2.1: At the end of the Billing period, Account A has 10,000 of the US Only Active, 2000 US Only Pre-Active, 1000 US Only Suspended, 10,000 of the global service Active, and 1500 global service Suspended.

Therefore the count is 22,000 total so the second tier pricing applies. Charges are 10000 * 0.85 for US active, 2000 * 0.80 for US pre-active, 1000 * 0.50 for US suspended, 10000*1.95 for global active, and 1500 * 1.50 for global suspended, leading to a total MRC = 8500 + 1600 + 500 + 19500 + 2250 = $32350

Billing Scenario 2.2: At the end of the Billing period, Account B has 20,000 of the US Only service Active, 3000 US only Suspended and 1000 of the global service Active.

Therefore they have 21,000 total so the second tier pricing applies. Charges are 20000 * 0.75 for US active, 3000 * 0.50 for US suspended, and 1000*1.55 for global, leading to a total MRC = 15000 + 1500 + 1550 = 33050

Billing Scenario 2.3: At the end of the Billing period, Account C has 10,000 of the US Only service Active (7000 with usage, 3000 without), 5000 pre-active (0 with usage),  10,000 of the global service Active (7000 with usage, 3000 without) and 5000 global Suspended (4000 with usage, 1000 without). Count is set to count only if usage

Therefore they have 14,000 total so the first tier pricing applies. Charges are 10000 * 1.10 for US active, 5000 * 1.00 for us pre-active, 10000*2.25 for global active, and 5000 * 2.00 for global suspended, leading to a total MRC = 11000 + 5000 + 22500 + 10000 = $48500

Billing Scenario 2.4: At the end of the Billing period, Account D has 50,000 of the US Only service (25000 active, 15000 pre-active, 10000 suspended) and 50,000 of the global service (40000 active, 0 pre-active, 10000 suspended) . The Count is based off of the # of US only packages + global packages.  They have 10000 US only packages and 20,000 global packages on the account

Therefore they have 30,000 total so the third tier pricing applies. Charges are 25000* 0.79 + 15000*0.75 + 10000*0.50 for US and 40000*1.70 + 10000*1.50 for global, leading to a total MRC = 19750 +11250 + 5000 + 68000 + 15000 = $119,000


Example 3: Tiered Across Status. Statuses "Active" and "Pre-Active" count towards the tier count

Active SIMs

Monthly Fee


US Only (Active)

US Only (Pre-Active)

US Only (Suspended)

US, CA, EU & AU (Active)

US, CA, EU & AU (Pre-Active)

US, CA, EU & AU (Suspended)

10000 - 15000

$1.10

$1.00

$0.50

$2.25

$2.00

$2.00

15001 - 25000

$0.85

$0.80

$0.50

$1.95

$1.80

$1.50

25001 - 35000

$0.79

$0.75

$0.50

$1.70

$1.65

$1.50

35001 - 50000

$0.75

$0.73

$0.50

$1.55

$1.45

$1.25

50 001+

$0.72

$0.70

$0.50

$1.40

$1.30

$1.20


Billing Scenario 3.1: Account A has 10,000 of the US Only Active, 2000 US Only Pre-Active (at time of Billing). During the period for September, they had a group of 2500 SIMS transition from Active to Suspended on the 10th, and they transitioned back to Active on the 25th.

Therefore they have 12000 total contributing to the tier count:

2000 (preactive) * $1 + 7500 (active) * $1.1  + 2500 (active) * $1.1 * (10/30)  (active period for the first 10 days, rounded) + 2500 (suspended) * $0.50 * (15/30)  (suspended period for the next 15 days, rounded) + 2500 (active) * $1.1 * (5/30) (active period for the last 5 days, rounded) 

→ 2000 + $8250 + $916.67 + $625 + $458.33  =  $12250