Gotransverse
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Oct 23, 2018One of the key benefits of consumption-based billing is that, when it’s set up correctly and run through the proper platforms, it’s flexible enough to take advantage of a wide variety of billing models based on customers’ needs and preferences as well as the requirements of different product and service lines.
Through real-time rating engines, the intelligent billing platforms that power consumption-based billing can juggle customer-specific rules for billing based on different usage models, from flat fees to much more complicated scenarios.
Common Usage and Rating Models
To paint a picture of the power behind these engines, here’s a primer on some of the common usage and rating models supported by the Gotransverse platform.
1. Allowances
The allowance model works similarly to a classic retainer you might pay an attorney or other service provider. The customer pays a subscription fee that covers up to a predetermined consumption amount (an allowance), and that fee is the same whether the customer uses the full allowance or not. These allowances can be prorated to account for customers who sign up in the middle of a billing period, and they can also include overage charges — per-event charges for every consumption event beyond the allowance — as well as rollover, which adds one month’s unconsumed balance to the next month’s allowance, just like old-school cell phone minutes.
2. Tiers
Tiered models include stair-stepped pricing based on amount of consumption. You might think of these as similar to bulk discounts. At the lowest tiers — the smallest number of units — you pay more per unit. But the more units you buy, the less you pay for them. For example, you might use 20 units for $10 apiece, but if you use 40 units, the price drops to $7 apiece.
3. Tapers
Tapers are similar to tiers in that the price decreases as the quantity increases. However, while tiered pricing applies to every unit purchased, tapered pricing only applies to the quantities within each category, just like the federal tax brackets. So taking the same quantities from the example before, the model looks a little different. You still use your first 20 units for $10 apiece, but if you use 40 units, you pay $10 apiece for the first 20 and then only $7 apiece for units 21 through 40.
4. Multidimensional
Multidimensional models calculate price based on complex formulas that take multiple conditions or attributes into account. For an example, look at your most recent Lyft or Uber receipt. You’ll see charges for time as well as miles, surcharges based on demand and even a flat fee or two. (You can see how these calculations could start to get confusing without an automated rating system!)
5. Sharing
Sharing models come in two different forms: Usage allocation pools reallocate charges to each user based on the share of the pool they consumed. Resource sharing looks more like a family plan, meaning every user draws from the allowance, and no matter what the balance looks like between users, nobody is charged overages unless the total consumption exceeds the cap.
6. Time-Based
For services with fluctuating rates (like hotel rooms or plane tickets, which change based on season, demand and, it would seem, whim) a rating engine can ensure each event is charged the rate that corresponds with the time the service was consumed or purchased.
7. Pass-Through
Pass-through rating allows businesses to take in a pre-rated event and apply it to customers’ allowances without changing the charge of the event. So if a portion of your pricing comes into your billing system already rated, you don’t need to waste time sending it through the rating engine again. Or if you want to add an upcharge to a pre-rated event, you can easily do that too.
8. Stored Value
A stored value model works like a subway pass. Customers pay upfront to “load” their accounts like they would load that subway pass, and then they draw down from the value as they consume services and products — like rides on the red line. Once they’re out of value, either the customer will receive notice and reload the account or an automatic charge will reset the balance for them.
9. Threshold Notification
While the Gotransverse platform’s near-real-time rating engine means customers can check in on their usage anytime throughout the period, threshold notifications are preset alerts designed to let users know when they’ve reached or exceeded a certain percentage of their consumption allowance or stored value. Just like those text messages you get when you are 75% of the way through your data plan.
Automating Usage and Rating to Optimize Billing
With a wide variety of models, some of which are fairly complicated, it’s easy to see how manual usage and rating efforts — or even efforts to reconfigure legacy systems to keep up — could lead to delays, errors, revenue leakage and unhappy customers. Fortunately, sophisticated intelligent billing platforms like the one from Gotransverse are designed specifically to handle high client volume and complex, variable billing models. The near-real-time rating engine can rate large volumes of data so you have a real-time glimpse into pending charges for your customers and ensures the billing process is smooth, efficient, and accurate for both the company and its customers.
If your organization is ready to make the shift to a more powerful billing system with limitless monetization models that enhances flexibility, ensures accuracy and improves customer loyalty, take a tour of the Gotransverse platform to check out its capabilities for yourself. Interested in learning more about how intelligent billing can give your business a powerful competitive advantage? Schedule your complimentary, personalized demo today.
Clare Corriveau is the Director of Marketing at Gotransverse. An award winning marketer, over the last 10 years Clare has built her career in SaaS and demand generation. When she’s not kicking SaaS in marketer-mode, you can find her spending time with her husband and kids, hiking with her pup Pippa and cheering on Michigan State.