Sample Pre-paid Plan

This whitepaper shows a typical configuration for pre-paid subscription plans.

For this example, consider a hypothetical web hosting company wishes to introduce a pre-paid plan that has two charges:

• 1. 1. • A monthly recurring charge of $165

        • 100 web pages are included at no additional charge, beyond which a usage charge of $1.65/page is levied each month.

In order to maximize cash-flow, the web hosting company would like to charge the customer up-front when the sign-up. While this can be done for the monthly $165 fee, the usage charge will necessarily have to be post-paid since the actual consumption will only be known at the end of the month.

Now, considering that customers may sign up in the middle of the month, they have another set of choices to make:

1. 1. 1. 1. Anniversary Billing - charge the customer on the same date every month. E.g., if she signs up on January 20th, her invoices will be generated on the 20th of every month. In this case, it is easy for the customer since there are no pro-rating considerations. However, it gets complex for the web hosting company since different customers will be getting their invoices on different dates, and usage charges will need to be transmitted on a dialy basis. (Note: On the plan configuration screen, this is equivalent to setting the "Billing Alignment" field to "Bill for a complete period")

         2. Partial Billing - Pro-rate the amount for the 1st bill, and then bill all customers on a fixed day. In this case, the customer signing up on the 20th will get a partial bill (for Jan 20-31) at the end of the month. This option greatly simplifies the billing management and accounting. (Note: On the plan configuration screen, this is equivalent to setting the "Billing Alignment" field to "Bill to end of current billing period")

So let's assume that the web hosting company selects the "Partial Billing" alignment. The plan setup screen (Select the "Plans And Products" menu and then click the "Create" or "Edit" button under the "Plan" section in the middle)

Now we configure the charges associated with the Plan. Click the "Create" button on the lower "Charges" table. The monthly recurring charge can be configured as seen in Fig 2. Note the "Pre Paid" selection on the radio button. Before saving this configuration, click on the "Show Advanced Options" link and select the "Pro-rated Charge" checkbox. With this selection, a customer signing up in the middle of the month will be charged proportionately.

After saving the monthly charge, add another charge. Since the 1st one hundred pages are free, we can configure the Pricing Type as "Tiered". The Charge Type is set to "Usage" based, indicating that usage data will need to be uploaded to system. 

Similarly, multiple Plans could be configured with different charges and prices. Fig 4. below shows a sample pricing structure.

Now you may create an Order using any of these plans and the Customer will be billed accordingly.