Determining Rate Elements and Units of Measure

Create a one-time rate element in business configuration. Within the Manage Business Configuration app, select Rate Elements from the left menu and then the Create button.

The system image above displays the configuration of a printer installation fee rate element. Under the General Info tab, define a rate ID and a label. Enter a description of the rate element, INSTALLATION_FEE, for example. You may enter an optional description. Below the ID and Label fields, is the Data Source Field. Enter None or Subscription. There will be no ongoing cost associated with that service or product. Selecting Subscription calculates the amount based on a subscription parameter, which represents the quantity of one item. A subscription with an item that includes a subscription data source displays an additional Subscription Parameter field. Within this field, enter the quantity of the one-time fee. SAP Subscription Billing will multiply the quantity with the defined amount.

Below the Data Source field is the One-Time Type field. There are two choices: Initial Fee and Allowance. Initial Fees are charged for a subscription item. Allowances are charged if a subscription has an allowance.

Allowances will be covered more in the following units of this course.

Now that we have defined the one-time type for allowances, we need to set our unit of measure (UoM). In Subscription Billing, a unit of measure is a standard quantity to measure and express the amount, consumption or usage of a product or services. It provides the basis for usage-based billing. Within the Manage Business Configuration app, select Units of Measure from the left menu.

Select a UoM under the Units of Measure column. For one-time and recurring charges, select EA, the UoM acronym for Each.

Let’s refer to the Rate Elements page again and complete the Billing Type, our last field for one-time charges. Under the Rate Elements section on the left, confirm INSTALLATION_FEE is selected. Set the Billing Type to a charge or a credit one-time element. For a one-time charge, set the Billing Type to Charge. The customer is billed a certain fee once. Select Credit to apply a one-time credit or discount. In most cases, select Charge for a one-time rate element. Turn on the Active switch above and save your selections. This rate element is now ready to use.

With the one-time rate element complete, let’s move on to recurring rate elements.

With recurring rate elements, the ID, label, and description follow the same standards and naming as one-time rate elements. Data source options also follow the same conventions as one-time elements. Selecting 'None' will ultimately result in a fixed recurring fee, where the customer pays a specified amount each billing cycle. Here the Rate Element does not have any reference to a subscription parameter.

For example, in a software business scenario, the customer pays based on users. Each license costs 5€. By changing the subscription parameter from 1 to 2, the recurring fee becomes of 10€ (not 5€). The subscription parameter represents the number of software licenses. For the Unit field, SAP recommends using "EA" for each. For Billing Type, select Credit if this subscription requires recurring a discount or cost adjustment. If you select credit and use the rate element in a subscription, the customer will be refunded. If you set up a recurring fee that the customer must pay, select Charge. The customer is billed the fee on a recurring basis.

Next, we’ll move to our third and final rate element: Usage-based element. 

Our next rate element to explore is the usage-based element. Under the Rate Elements section, confirm that the Standard Print Group rate element is selected. Usage-based elements use the same ID, label, and description standards and naming as one-time and recurring rate elements. However, with usage-based elements, the data source is not the same. Usage-based elements are set to Usage by default and cannot be changed. If you upload usage data via the Manage Usage Records Simulation app, usage-based elements can only be charged. You will learn more about usage records in later units. For now, understand that usage-based rate elements represent usage-based charges. 

Next is the Usage Rating Variant field. The usage rating variant allows you to define how usage data is measured and priced. There are two selections: Aggregated and Individual. If you select Aggregated, usage records are combined and rated according to the billing cycle selected in the rate plan template. If you select Individual as the usage rating variant, each usage record will reflect a single business event and is rated individually and immediately, irrespective of the billing cycle. A separate bill is created for each usage record and closed automatically.

The Type of Technical Resource ID field refers to the type of service being provided to the customer. Later, in Unit 13, when we create the subscription, we will also enter a value for the Printer ID to identify the printer, which is called the Technical Resource ID. The technical resource ID allows classification of the resource used to meter the usage of the service. The technical resource ID relates the relevant subscription item with the technical resource type. You can choose to autogenerate the technical resource by activating the switch in the configuration. In this case, once you create the subscription, the system will generate a random Printer ID.

In our case, we will not autogenerate technical resources, but create and enter our own. Above and right of the Type of Technical Resource ID is the Unit field. Again, like the other rate elements, we will select EA for Each. However, based on the usage-based scenario, it is possible to use other unit types. SAP Subscription Billing supports a defined set of units of measure with ISO codes.

These ISO codes facilitate integration with other SAP products and rate plan templates with pricing schemes. 

Next is the Billing Type field. Again, for the Billing Type, you can distinguish between Charge or Credit. Let's consider a electricity service scenario: select Credit if a customer obtains electricity through solar power and sells the surplus energy. The customer would receive money per kilowatt. Under the Billing Type fields there are other usage-based settings. Select the Use Rate Subelements switch to activate the use of rate subelements for usage-based charges. Use subelements to separately rate consumption that is measured by an external system for the same technical resource. An example of this would be e-mobility where billing is time-dependent.

Perhaps midday costs are 0.4€ per kilowatt-hour and 0.5€ per kilowatt-hour in the evening. This would mean a subelement for the midday rate and another subelement for the evening rate. Select Use Measurement Specification to activate the use of measurement specifications for usage charges. You may also use measurement specifications to include additional information about the metering of usage in a third-party system.

In our printer example, we have created two rate elements, one for the standard print and another for premium print: 

Now that Lisa has created a few rate elements to move this subscription forward for Bob, we will move to her next step, which is to have the prices calculated in SAP Price Calculation to benefit from the added flexibility in maintaining pricing models.