What Are Usage-Based Fees & How to Add Them to Contracts
This user guide is about Usage-Based Fees. After reading this guide, you’ll have a basic understanding of usage-based fees and how to add them to your contracts.
Required User Rights
To be able to use these operations, you’ll need at least the following user right: 3150 Menu – Contracts.
Usage-Based Fee
A Usage-Based Fee is one of the charging models in the Good Sign Contract Module.
Usage-based Fees are continuous pay-per-use services, where the service fee is determined based on the actual transaction (usage) quantity of the service. For example, a printer company providing printers as a service can price their service based on the actual quantity of black & white and color pages printed. For example, the price for the black & white prints could be unit priced at 0,18€/page, and color prints could be priced so that first 150 pages per month cost 0,34 €/page and prints over 150 in a given month would cost 0,30 €/page.
Usage also allows the adding of a base fee to the contract line. This feature aims to simplify maintenance by having fewer contract lines. The Base Fee is charged monthly with quantity of one, regardless if there is usage or not. I.e., with one contract line you can enable base + overage type charging. On the contract line, you can give the quantity of usage included in the base fee. Having the quantity included without a base fee product if one is not invoiced is also possible, since certain usage is allowed without cost. Also, there can be a base fee without usage included, but for clarity, in such cases, using the Base Fee contract line is recommended. This feature is only available with the unit or volume pricing models.
The Usage-based Fees are billed in arrears. The transaction quantity is received via data interfaces to Good Sign. Data can be imported, received via SFTP or submitted via API.
Pricing models that can be used with Usage-based Fees are:
- Unit
- Volume
- Tier
- Block
Creating a New Usage-Based Contract Line
To create a new Contract Line, go to the Contracts or the Contract Lines dashboard, select the contract you wish to add a contract line to, go to the Management menu and then choose New Contract Line.
Another way to create a new usage-based contract line is to go to Contracts > Contracts. Then open the contract where you wish to create a new contract line. Then, press the + icon in the Contract Lines section.
After pressing New Contract Line, a pop-up window appears where a suitable Profile (Charging model) for the Contract Line can be selected:
After selecting Usage from the profile menu, a pop-up window appears:
There are no mandatory fields, but below is a table of commonly used fields and their descriptions:
| Field | Description |
| Contract Line Valid From | Start date of the Service |
| Contract Line Valid To | End date of the Service |
| Pricing model | Select Unit, Tier, Volume or Block pricing |
| Product | The product that is charged from this contract line |
| Quantity | Irrelevant in Usage based Contract Line. |
| Aggregation Period | Defines the time period for which transaction quantity is summed to |
| Aggregation | Defines the calculation used to charge depending on your business logic |
| Mapping Values | Values to match the transaction data received to the contract line |
Tip: If you want to add a new service, you need to add it to the product catalog and then to the contract lines
After filling in the needed fields, press Save.
Note! After the required fields have been filled, an automatic charge will be made with the scheduled billing task runs, typically every morning. A charge is generated given that the contract, contract line and price are valid at the time, and valid transaction data is received against the contract line. By default, usage charges are not generated before the 3rd day of the month, to allow time for receiving the transactions from previous months
Data Aggregation
Data aggregation is controlled by each contract line, allowing flexibility to varying business models. There are two important elements to it: the time period and the value calculation.
Aggregation Period
The Aggregation Period can be one of the following:
- No – No aggregation is done, and transactions are not processed or charged
- Month – Usage quantity of transactions is aggregated to a monthly level. I.e., the entire February transaction volume for the contract line is summed to February etc. (each month is separately charged)
- Year – Usage data is aggregated yearly. All transactions within a year are summed, and from a charging perspective. A contract line has a yearly maximum quantity of X and when the aggregated sum exceeds this, the charges of the extended part will be inserted to monthly invoices
Note! In the Year aggregation period, the aggregate is calculated continuously. The sum represents the yearly cumulative sum. And minimum, maximum and average also represent the whole calendar year
Aggregation
The Aggregation selection is made in the Contract Line (Usage) section.
Aggregation out-of-the-box options are:
- No – No aggregation is done, and no charges are created
- SUM – Sum of all the transactions is calculated based on the aggregation period selected and the price is determined based on the sum
- MIN – Minimum amount of a single usage data record against the contract line on that specific aggregation period is used as the quantity and as the price determination level on volume-based pricing models. This model is for scenarios where usage data is loaded in smaller increments than the aggregation period
- MAX – Maximum amount of a single usage data record against the contract line on that specific aggregation period is used as the quantity and as the price determination level on volume-based pricing models. This model is for scenarios where usage data is loaded in smaller increments than the aggregation period
- AVG – Average amount of a single usage data record against the contract line on that specific aggregation period is used as the quantity and as the price determination level on volume-based pricing models. This model is for scenarios where usage data is loaded in smaller increments than the aggregation period.
Mapping Values
As the usage-based contract line requires a data feed with the actual quantity of the transactions, it is vital to make a connection between the usage data and the contract line. This is done with a Mapping Value that is defined for each usage-based contract line.
A mapping-value is an identifier that matches transaction-based usage data to the contract line and thus to the correct product and pricing. The mapping value is added in the Contract line (Usage) window, in the Usage data section. The same mapping value is then required in the event data to make a joining between the usage data and the contract line. A contract line can have multiple mapping values, so different usage data records can be collected to the same contract line, as long as all the mapping values are in the contract line.
Type a mapping value of your choice and then press Add to confirm the mapping value. Mapping values can be deleted by pressing the X next to the mapping value.
Tip: If you don’t have good natural mapping values in the transaction data from your source systems, consider i.e., using a combination of customer identifiers and product codes etc., to produce a unique value
To see the existing transactions of that specific contract line, press Statistics. In the Statistics window you can see the usage characteristics by time period.
Tip: In the usage statistics, if the pricing matrix is empty, it means that you may have an issue in the pricing. Once you’ve fixed it, you should be able to get the correct charges
