Rates

Rates assign pricing details to Offerings

Rates assign pricing model (e.g. tiered, flat) prices, and timing (advance or arrears) to an Offering.

An Offering may have multiple rates (e.g. for different customer segments).

Example: Seats with Implementation Fee (from Offerings page)

ProductProduct TypeQuantityBilling frequencyPriceSubscription Timing
Implementation feeOnetime1Once$10,000Advance (upfront)
SeatsSubscription10Monthly$1,000 / seat / yearAdvance (upfront)

Rate details

Rates can be thought of as a "Price Book".

Each Offering can have multiple Rates associated with it. A new Rate is based on the following:

  • Currency
  • Billing Frequency: the length of time for which a product applies.
    • Options: Monthly, Annually, etc. including any number of months.
    • Examples:
      • If a contract length (defined in Quoting) is 12 months and frequency is monthly, there will be 12 full monthly periods in the Contract.
      • If contract length (defined in Quoting) is 15 months and frequency is semi-annually, there will be 2 full periods of 6 months each + 1 partial period of 3 months in the Contract.
      • If contract length (defined in Quoting) is 15 months and you seek to invoice all charges at once, set frequency to be 15 months.
  • Billing Timing
    • Advance (aka upfront): billing occurs at the start of each period
    • Arrears (aka after): billing occurs at the end of each period
  • Sales Channel
  • Plan

SaaS pricing is commonly done in terms of Good, Better and Best with pricing of each done on either a monthly or annual basis. In this case, create six Rates -- Good/Monthly, Good/Annual, Better/Monthly, Better/Annual, Best/Monthly and Best/Annual. No need to create multiple Offerings!

You can also indicate on a Rate whether you want to be offered only on the self-serve channel or to be used by the sales reps for quoting.

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Reseller Pricing

Reseller Pricing will be offered in the future using Rates. You would be able to support different prices per reseller.

Pricing Models

Rate offers following pricing models to be assigned to a Product

  • Volume - Pricing is equal to price per unit times quantity. Note that you can create Volume-based tiers in which case the pricing of that tier will be chosen to calculate the final amount.
  • Tiered - Pricing is incremental and depends on the all the previous tiers. See the example below.
  • Flat - Pricing is independent of the quantity
  • Percent of Total - Pricing is a % multiplied by the price of other products on the Quote (e.g. support priced at 10% of other core licenses)
  • Custom - Pricing is decided during quoting

Volume vs. Tiered pricing comparison

As an example, let's say you the following pricing model

Pricing ModelFromToPrice Per Unit
Volume0105
Volume11504

If the quantity selected is 12, Pricing = 12 * 4 = $48

Let's say the pricing model is Tiered instead,

Pricing ModelFromToPrice Per Unit
Tiered0105
Tiered11504

If the quantity selected is 12, Pricing = 10 * $5 + 2 * $4 = $58

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Best Practice

For SaaS, Tiered pricing is recommended. Volume-based pricing applies a common discount on all units purchased, including units purchased earlier. This can create challenges.

In the above example, let's say the customer buys 10 units and they pay you (10 * 5 = $50). The customer likes your product and comes back and buys an additional unit. Total pricing for 11 units = (11 * $4) = $44. Decreasing your revenue by $6 for a larger purchase does not make sense for you or your customer. Volume pricing should be used cautiously.

Use Cases for creating new Rates

  • Pricing experimentation
  • Pricing in different currencies
  • Pricing for different subscription periods (e.g. monthly, quarterly, annual)
  • Pricing across different sales channels
  • Price the same product using a different business model - For instance, you can sell Users (a Product), based on volume for self-serve and only allow 10 users, while for your sales-led channel you can sell Users on tier-basis and potentially allow infinite Users.

FAQ

  • How do you set up my product catalog for upfront billing for the entire contract period?
    • RevOps or other Admin: Create a Rate called Upfront with a long Subscription Frequency (e.g., 5 years or more) and Advance Timing
    • AE / CSM: Use that Rate on the Quote. As long as the Subscription Frequency of the Upfront Rate RevOps created is >= the Contract Length, all charges will be billed upfront and reflected as such in the Billing Schedule.
      • Bonus: use a Custom Display Frequency to show the price in a way your customer will most easily understand it. Most common choice is annual or monthly.