Set Up and Sell Products
Learning Objectives
After completing this unit, you’ll be able to:
- Explain how to define products and resources using Usage Modelling.
- Describe how to set up rates and pricing rules with Rate Management.
- Recall how to specify policies for entitlements and grants.
Build Your Usage Strategy
A consumption-based product follows a lifecycle, and your usage strategy should cover each stage.
In this unit, you explore how Usage Management helps you set up products and rates, and sell the products.
Set Up and Define Products with Usage Modelling
In this phase, you set the foundation for how to track, measure, and sell a consumption-based product. And you configure the building blocks of your usage-based offering.
Here's a breakdown of the key steps you complete.
Define the Sellable Product
First, create a Product record that your sales team sells to the customer, for example, API Access Premium or Cloud Storage. Choose from these usage model types to configure your offerings.
- Anchor: The main product or service sold to the customer
- Pack: An add-on product or service that provides additional units of usage resources
- Monetary Commitment: Customer agrees to spend a minimum amount on a product or service within a period.
- Quantity Commitment: Customer agrees to use a minimum quantity of a product or service within a period.
- Token Commitment: Customer agrees to use a minimum number of tokens for products or services within a period.
This product links to all the usage-related components you create next.
Establish the Usage Building Blocks
Here, you define how to measure the product’s usage. This involves creating a Unit of Measure Class such as Gigabytes and a Unit of Measure such as GB. You then link these to a Usage Resource, for example Data Transfer, that represents the specific resource being consumed. Finally, you associate usage resources with products through Product Usage Resource records, which also specify the effective date range.
Set the Rules for Consumption
You configure several policies to govern how to manage usage over time. This includes:
- Usage Aggregation Policy: Decides how often to summarize usage records, such as daily or monthly.
- Usage Renewal Policy: Sets when and how to renew a customer’s usage entitlement, such as at the start of a new billing period.
- Usage Rollover Policy: Specifies whether any unused usage from a previous period carries over to the next.
- Usage Overage Policy: Defines how to handle consumption beyond grant limits. For example, whether to charge for extra units and how to calculate them.
- Usage Grant Refresh Policy: Indicates whether to refresh the grants for a usage resource and how often, such as monthly, quarterly, or annually.
- Usage Product Grant Binding Policy: Determines how to allocate usage product grants and when to apply them by binding them to specific targets such as accounts, contracts, or products.
- Usage Commitment Policy: Sets the rules for applying commitments to a usage resource, including how to apply rates once the initial commitment is fulfilled.
Grant Usage and Entitlement
Next, you create a Product Usage Grant to specify how much usage a customer receives, either a fixed quantity or as part of a tier. The Usage Product Grant Binding Policy then links this grant to the product, so the entitlement applies at purchase.
Activate
Finally, make sure all your records, including the product, unit of measure, usage resource, and all associated policies are set to an Active status. Inactive records can't be used in live pricing or quoting.
Establish Measurements with Rate Management
After defining your consumption-based products and their components in the modeling phase, move on to Rate Management. Here, you create the prices and rules that determine what a customer is charged for their consumption. Think of this stage as building the pricing engine that rates and bills usage.
Here’s how you do it.
Define Rates with Rate Cards
Start by creating Rate Cards and Rate Card Entries to establish the price per unit of usage. You can set different Rate Cards for products or customer segments. You configure a Rate Card Entry for each product to specify its price per unit of measure, for example $0.50 per GB. It's crucial that the Rate Unit of Measure name on your entry matches your Price Book's currency selection
Set Up Tiered Pricing
If your pricing model includes volume discounts, configure Rate Adjustment By Tiers. This lets you apply different rates for different levels of consumption. For example, offer a lower price per GB after a customer uses 100 GB. A key rule here is to make sure your tiers are continuous. This prevents gaps in your pricing model and avoids consumption discovery issues.
Link Rates to Your Price Books
Connect your Rate Management setup to your quoting and ordering process. The Price Book Rate Card entity links the Rate Card to a specific Price Book, giving your sales team access to correct usage-based pricing on a quote.
Build Your Rating Procedures
Create Rating Procedures that outline how the system discovers and applies rates.
- Rating Discovery Procedure: Fetches the correct rates based on the customer's usage. It acts as a lookup mechanism to find the right rate cards and tiers.
- Negotiable Rating Procedure: Applies the actual rates to the consumption data, calculates any overages, and prepares the final charges.
Activate and Refresh
Activate all your Rate Cards, Rate Card Entries, and the Rating Procedure. Then, refresh the associated Decision Tables to have the latest pricing information.
Debug with Rate Waterfall
As a best practice, enable Rate Waterfall in your Rate Management setup. This tool generates detailed logs that show a step-by-step breakdown of how the system calculates the charges for each line item. It's an excellent resource for debugging and verifying that rates are applied correctly.
Offer Products with Usage Selling
With products and rates set up, it’s time to sell the products. With Usage Selling, sales teams can easily quote and sell consumption-based products, with a clear view of pricing details right in the quoting process. They can also:
- Negotiate rates and discounts: Browse the product catalog, create quotes that include consumption-based products, then negotiate rates and apply discounts in real time.
- Customize entitlements: Configure usage entitlements and grants within the quote to align with specific customer contracts and needs.
- Offer bundles and add-ons: Bundle usage grants with base products or offer them as optional add-ons to create customized packages.
When you create and submit the order from the quote, the system automatically creates the assets. Assets are the products or services a customer owns, and are used to track entitlements, manage renewals and amendments, and drive billing and fulfillment.
Next Up
In this unit, you learned how Usage Modelling helps you set up products and their components, how Rate Management lets you establish dynamic pricing, and how Usage Selling gives your sales team the tools to easily sell these complex products. In the next unit, you explore the final two phases of the lifecycle: managing wallets and tracking consumption.