20 Aug The guide to Salesforce Billing: #3 Usage-based billing
If you’ve read the first two articles in this series on going from the order to invoice and collecting payments, then usage-based billing might just blow your mind! Usage-based billing goes hand in hand with modern business: the buying and selling of goods, products, or services over the internet via subscriptions. And it’s the next big thing in the Internet of Things (IoT), especially in regards to ‘metered billing’ of streaming services and Software as a Service (SaaS).
Subscription-based services were once limited to water and electricity utilities or newspaper and magazine subscriptions, but now e-commerce is growing while print media dwindles, and SaaS companies depend on subscriptions for their business model.
Salesforce Billing offers usage-based billing to meter and charge customers for their products and services. It helps you manage and invoice the consumed units of a particular product you’re selling. Usage-based products typically bill in arrears while tracking usage data over a given time.
Usage Records and Usage Summaries
Salesforce utilizes usage records grouped into usage summaries to manage usage aggregation, usage mediation, and usage rating processes to maximize profits.
For example, your cell phone provider has a data plan that charges for each megabyte (MB) you consume during the month. On any given day, you consume between 5 and 15 MBs. Each of these days is represented as a usage record. Additionally, each of these days can be broken down into hours if different rates are to be charged for both peak and off-peak hours.
Since phone plans are billed monthly, a usage summary contains anywhere from 28 to 31 usage records for each billing period. And with those two pieces of usage data, Salesforce Billing takes the aggregated data from a third-party provider and organizes and stores it for reference. This is called Usage Mediation. Finally, the aggregated and mediated usage data goes through a usage rating process to determine the price per unit for each instance of usage.
The basics of usage-based billing
We’ve established that usage summaries consist of groups of usage records. In addition, both the usage record and usage summary must have matching lookup IDs. This lets Salesforce tie the amended quote back to the original usage summary that provides a kind of history.
When you create an order, usage summaries are generated for your usage order products, based on the usage summary fields for the billing day, billing frequency, and the start and end dates using predefined date ranges for counting usage records.
For example, the January usage summary start date is 01/01/2018 with an end date of 01/31/2018. So, a usage order product that’s billed monthly starting on January 1st, 2018 and ending on December 31st, 2018 creates 12 usage summaries containing 28 to 31 usage records, depending on the month.
Finally, usage order products are included in an invoice if the usage summary’s next billing date ends before the order product’s next invoice target date. This ensures that all usage summaries ending before the invoice target date are included in the invoice.
In conclusion, Salesforce Billing has all the bells and whistles you’ll need to maximize your profits in the ever-expanding e-commerce world. And usage-based billing models have had to adapt to the dynamics of the subscription e-commerce market and its fiercely competitive environment. e-Commerce retailers and service providers are constantly striving to deliver the optimal online experience to promote customer loyalty and capture future sales on a recurring basis. This evolution in usage-based billing strategies benefits the e-commerce retail and service providers as well as their online consumers
We hope you enjoyed this trio of Salesforce Billing articles. Don’t forget to contact your Simplus Billing experts for more information about invoicing and billing tips, tricks, and workarounds.