Charges
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Product plans contain the charges that show up as line items on quotes and invoices. Each charge will be listed separately.
This is the name of the charge as it will appear on quotes, invoices and on the subscription. If you have multiple products with plans, you might want to choose prefixing the charge name with the product name. This setting is controlled at the product level.
By default, the invoice line item will be the product name followed by the charge name like this:
Starter - Users
If you want to override this format, enter a specific invoice line text, for example:
Starter users
You will see the same layout in the quote builder, on quotes and invoices.
Depending on the unit, different number of decimals may make sense. For example, users are usually counted in the major currency unit, e.g. $10 or $100 so there you don't need decimals. But you are selling an extremely low priced unit like text messages, you may want to use 4 to 6 decimals.
There are three different charge types:
One-time
Immediately when the invoice is generated.
Recurring
In advance, at the beginning of each period.
Usage-based
In arrears, at the end of each period.
One-time charges are only invoiced once, at the time when an invoice is generated. If the invoice has recurring charges, the one-time charge and the recurring charges will appear on the same invoice.
A product plan's recurring charges end up on the account's subscription and will be invoiced to the customer until the subscription is canceled. Recurring charges are invoiced are regular intervals:
Monthly
Quarterly
Semi-annual
Annual
Generally, you will want to only have charges with the same billing period on a subscription because it will be easier for the customer to understand how they are being billed. The only exception is usage-based charges, which are billed in arrears.
A recurring charge also has a unit denomination, such as users, servers or something else where the quantity is known in advance.
When you don't know in advance how much consumption to bill for, you need usage-based charges. A good example is a utility company that needs to read your meter every month to see how much electricity you have consumed. This is why usage-based is sometimes also called metered billing.
In the online world, example of metered services could be text messages sent, gigabytes transferred or monthly active users.
There are three different pricing models for a charge and which ones are applicable depends on the charge type.
Flat price
Flat price
Flat price
Tiered *)
Tiered *)
Volume *)
Volume *)
Bands *)
Bands *)
Flat price means that the price is just a number with no quantity, but tiered and volume require a bit more explanation. Consider the following price tiers:
0-10
$10
5
5 * $10 = $50
5*10 = $50
11-20
$8
15
10*$10+5*$8 = $140
15*$8 = $120
21-
$6
25
10*$10+10*$8+5*$6 = $210
25*$6 = $150
With a tiered pricing model prices, each individual tier is priced separately whereas volume pricing model uses the highest tier reached for the entire quantity.
When should you use tiered vs volume? Generally, it makes more sense to use volume for recurring charges and tiered for usage-based charges. The reason is that quantities that are contractually committed could result in a lower price if the customer crosses a tier that reprices the entire quantity. That is less of a problem with metered services where each new period starts anew with zero.
Price bands differ from tiered and volume pricing in that instead of pricing per unit, the quantity indexes into a tier and results in a fixed price. Example:
1-99
$20
5 -> $20
100-499
$75
101 -> $75
500-
$300
500 -> $300
If you want to create a product that accounts can subscribe to for free, simple create a recurring charge with a flat price of zero. It's important that the charge is recurring, because it that will create a subscription when the quote is applied on the account.
If you wish to split out different types of revenue on individual lines in , you can use the accounting code. For example, you may have one code for implementation and another for subscriptions. Or you can even different line items for different plans.
If you are using Bunny's integration with Avalara, make sure you specify the correct tax codes for every single charge. You can use Avalara's to look up the correct tax code.
