Quick Hits: Mastering Tiered Billing

Transcript

All right. So we'll get going here. My name is Mark Hansen. I'm a Senior Solution Consultant here at Zone. I was born in Chicago and I currently live in New York City. I've been at Zone for a little over two and a half years now. I joined from Salesforce where I worked on their CPQ team for several years. And prior to that, similar to most of the people that work at Zone, I worked at NetSuite directly for about five years. So I've got experience in both of the systems that we're typically talking about. And we'll go through a high level architecture here in a second.

So just a high level overview, what's the problem? Why do companies typically look to ZoneBilling? It really comes down to four key areas. Subscription and contract management have really been evolving and changing over the past 15, 20 years from the way that contracts are constructed, set up by sales reps to the variables that each customer, including tiered pricing like we'll talk about today, it's really gone from fixed-recurring subscriptions to more usage or consumption-based billing. Other things, if you've been on other webinars like prepayments and minimum commitments and things like that. But overall, it's become very clear that a two-dimensional record, like a NetSuite sales order, is really not going to be adequate to handle an ever evolving, living, breathing contract. So what you need is an orchestration tool just to ensure that sales, billing, finance are all on the same page as far as invoicing and revenue recognition. And that orchestration tool is ZoneBilling.

So why specifically ZoneBilling? It's the most flexible tool that's completely built within your NetSuite ERP. We save our customers tons of time each month and also give the sales team the ability to be much more nimble and creative with how contracts are set up. And that's really going to be important with today when we're talking about tiered billing, whether that's a standard marginal or a slab billing or a range or linear type tiers. Or even if you have multiple different items and you want to consolidate those together and then use those to see which tier your customers achieve as far as their usage.

So we'll go over a quick architecture, which is really a four step process. So the first one, if these are originating, meaning your opportunities and contracts in Salesforce, that could be Salesforce standard, a sales cloud, that could be CPQ, that could be even service cloud in some situations. You create your contract, close when your opportunity, select your products, and then a subscription, and a subscription item or multiple items are created. So a subscription is going to be a contract. Subscription items are going to be specifically: what did they purchase? Those could be fixed recurring products or items. Those could be usage-based products or items like we'll talk about today.

And then the second integration that we typically see is going to be some sort of external system, whether that's proprietary system, it could be something like AWS or Looker, where we're bringing in your usage or your variable amounts, quantities, and creating charges. Charges are really future line items that go on an invoice, which is then the third step, which is to create the invoice, which is a native NetSuite invoice record, and then you follow your payment setup. Maybe you have some approvals. None of that changes. We just give you the flexibility to, again, get more creative with the way that your contracts are set up for your customers.

And then finally is revenue recognition. Pretty straightforward for what we're going through today. It's typically just going to be a default one-time hosting for any sort of usage. But we do have some really nice functionality around revenue recognition and would love to set up a more in-depth demo for you if you like what you see today.

All right, so first and foremost, we're completely built within the walls of your NetSuite platform. So don't have to go into any other system in order to do any of these things from rating and creating your charges to invoicing, revenue recognition. You can see we're role-based, permission-based. Just think of us as if we were selling a NetSuite product, if you called up your account manager, saw a demo, liked what you saw. we would just be a bundle of records that were released into your production environment.

So you can see my subscriptions or my contracts, my items, my usage data, revenue, renewals, and then two things that I always like to point out, execute rating and create transactions. You're going to see me hit a button for both of those here in a minute. Just keep in mind in a real life scenario, these are probably fully automated. Most of our customers have everything at least automated up to a certain extent, but it's fully up to you. If you have, excuse me, if you have customers or excuse me, we have customers who want everything automated for them. We also have certain customers who will say automate us up to a certain point. Maybe they've got very large customers that they want a second set of hands or eyes on before those invoices are created and they're sent out.

We use native NetSuite saved searches all throughout our product. So it's fully up to you if you want everything that you're going to see today, fully automated, partially automated, not automated, et cetera.

So I'm going to go ahead and open up a customer record here, standard customer record, same thing that you have today. And then you'll see that I've got two subscriptions. And again, subscriptions are contracts. The reason that I have two subscriptions is because I've set this up for the two different use cases that we'll go through today. In a, again, a real life scenario, you probably just have one subscription. And again, that's just contract for each of your customers, but I've just broken them out by use case here.

And this subscription is really my one stop shop for everything that I have as far as this contract for this specific customer. So I can see my start dates, my end dates. I can see the generic items that I've set up, but everything that the customers purchase, they've got a usage item A and a usage item B. Those could be gigabytes or whatever metric you're rating and charging your customers on.

We can see that my rate type, really the first differentiator with Zone is telling NetSuite what type of product is this. Is it a fixed recurring product where we're billing them the same amount each month, each quarter, each year, or is it something that's variable consumption-based, usage-based, and then my price book. And this is a tiered price book. So these are the two different use cases that will first go through a marginal scenario, which is just like you're doing your taxes. Some might call it a slab where you're basically charging your customer based on the different quantities at a different rate per tier. And then we'll go through linear. So that's what you could call a range where basically the total quantity is what you're going to be charging your customer for all of the quantity that they have.

And I'll open up each of these items side by side. So we're going to have the same tiers here that are set up. The first one's marginal. So that means that I'm going to be charging a different price for a zero to 10, a different price from 10 to 25 and so on. And then my second item is going to be linear. So I'm going to be charging, for example, if the customer had a quantity of 100 or over a hundred rather, they're going to be charged $3 each for all of those quantity. We also have the ability to do a fixed rate per tier. So this is good with, you might call it band pricing, but basically where whatever this price is, is going to be charged for the entire quantity that's within that group. So a lot of different ways that we can handle this, really just scratching the surface of usage here today.

So this is basically me simulating what the connection or API connection or CSV looks like with your proprietary system. So I'll bring, 55 in for the marginal rate, now this is what I was referring to before where this would be completely automated in a real-life scenario and the second one is going to be linear. We're going to bring in 75 and this is going to say the total quantity 75 are going to be priced at whatever tier that 75 quantity is at. And as that's rating we can now see that my first grouping has been broken out here by tier. That'll be broken out on the customer invoice. And if we take a look at our second one in my chart together, we can see all 75 have now been rated in charge at that 350. I've also got a billing profile on here that's going to subtotal by charge item. That basically means that for usage item A and usage item B, we're going to break those out with subtotals. The customer clearly sees what they're being billed for. I'm going to go ahead and create my invoice. This will take about 15-20 seconds.

While that's loading, I'm going to go ahead and look at my other one here, second subscription, my second use case. Just to highlight that we do have the ability to really meet any use case that you need, very flexible because we're using NetSuite saved searches. So in this example, I'm actually going to be bringing in three different item types or what we call rate plan items, item A, B, and C. I apologize, the wrong order there. So we'll have 50 quantity for B, 30 quantity for C, and then 25 quantity for item A. And we're going to total those up. And that is the tier that they're going to achieve. So I'll hit rate now.

And the nice thing about this, these are all check boxes. So I'm able to say, rate these together, do them shared or do them individually. There's no need for scripting or any sort of customization. We've handled that for you. And again, this is really just scratching the surface on the different use cases that we can have for you. So two things have happened. I've broken this out by the individual charge item. I've brought in my description to let the customer know that these are combined usage from all the items here. It's rated them shared collectively. So they've reached this tier, which means $3 each and they're billed 75, 150 and 90 respectively.

And then can go ahead and come back into my other subscription here as we're getting up on the 15 past the hour. You can see my invoice that's been created with that billing profile. You can subtotal those out. And again, this is a native NetSuite invoice that will be sent out to your customers. So again, I know I'm running up on time here. Thanks everyone for joining and definitely reach out if you'd like to see a more tailored demo. We do all custom demos here. So we'd like to do a discovery for 45 minutes to an hour and then give you a 60 to 90 minute demo to show how we can meet your business requirements. Thanks so much and have a nice day.