Price and Discount Tags

Price Tags and Discount Tags are unique and important concepts in Nue.  They serve as additional pricing mechanisms on top of list prices defined in standard or custom price books.  List prices defined in price books are considered basic unit prices.  With Price Tags and Discount Tags, users can define additional pricing tiers or tier-based discounting based on Quantity or Subscription Term, thus helping  businesses to offer flexbile pricing options to customers based on their needs and budget.  

 

DO YOU KNOW?   The Price Tags and Discount Tags concepts may be new in B2B selling, but they have been a common practice in the consumer world.   Let's take the example of a shoe store. When you come across a pair of shoes with a Manufacturer's Suggested Retail Price (MSRP) of $450, you may notice multiple price tags stacked on top of each other. There's a first price tag showing $300 because they're currently on sale. And wait, there's more! There is a yellow tag indicating an extra 20% discount because of o a limited-time seasonal promotion, followed by a red tag offering an additional 5% off for store members. Each tag represents a distinct promotion that has been layered onto the product, adding to its value and potential cost savings for customers.   As the store owner, this layered approach with multiple price tags provides you with valuable insights. This level of visibility enables you to assess the effectiveness of different promotions and gauge their impact on sales.

 

In Nue, Price Tags and Discount Tags have exactly the same structure, but serve different purposes.  Price Tags set the price (which overrides the price book prices), and Discount Tags set the discounts.  

 

While you can have a single Price Tag, you have the flexibility to include many Discount Tags based on your requirements. This, combined with list prices, multi-attribute pricing, Price Tags, and Discount Tags, grants you virtually limitless pricing possibilities. 

Price Tags (or Discount Tags)

A Price Tag can be a price-type price tag, or a discount-type price tag, hence we call them Price Tag and Discount Tag respectively. Structurely, throughout this document, we refer to both Price Tag and Discount Tag and price tags.

 

Create Price and Discount Tags

You can follow the steps below to create price and discount tags: 

• Login into Nue App
• Navigate to Price Builder → Price Tags
• Click "New Price Tag" to create a price tag, or "New Discount Tag" to create a discount tag. 

Attributes on a Price Tag include (examples will follow after these definitions first): 

• Price Tag Name: Give your price tag a name.

• Code: If your Price Tag will be used as a Promotion or Coupon Code, enter it in the Code field.

• Description:  Description can be used to provide a short description of the price tag.

• UOM Dimension: The dimension will define whether the price model (volume vs tiered) will be applied to quantity or term.

  • If Quantity is selected, you will need to select a Quantity Unit, e.g. User, Hour, Agent, etc., so that this price tag is only applicable to products having this quantity dimension.  
  • If Term is selected, you will need to select a Term Unit, e.g., Month, Year., so that this price tag is only applicable to products having this term dimension.

• Price Model: This option will determine whether the price tag will be applied to total volume or based on a tiered or ramp pricing model. 

• Start Time: This is the date/time the price tag will be applied. Any quotes with a start date earlier than this date/time will not be able to apply the price tag.

• End Time: This is the date/time the price tag will end. Any quotes with a start date after this date/time will not be able to apply the price tag.

• Active: When enabled, the Price Tag will be active. If disabled, the price tag can no longer be applied.

• Tier Type: Available values are: Volume, Tiered, Ramp

  • Volume: If selected, the price of all the units you’re selling is within the set price range. It works great for selling products or services in bulk.

  • Tiered: If selected, the price per unit you’re selling is within a particular price range. Once you fill up one tier you move to the next. It works best for usage. It gives your customers incentives to use and purchase more.

  • Ramp: If selected, the price of the current subscription term is calculated based on the price of the previous subscription term.

• Effective Dates: Start Time / End Time.  Note that since Price Tags are also used for discounting purposes, the effective dates need to be of type DateTime instead of Dates (e.g., the promotion starts at 8pm PST).

• Active:Indicates if the price tag is active. When enabled, the price tags will be applied; otherwise they will no longer be applied.

The Start Time, End Time and Active status determine when and whether this price tag will be applied.

Price Tiers (or Discount Tiers)

A Price Tag contains one or more price tiers. You can click 'Add Tiers' to quickly add one or more price tiers.

 

Each price tier contains the following attributes: 

• Tier Type: Available values are: Flat Fee, Per Unit

  • The default tier type is Per Unit
  • You can mix and match Flat Fee and Per Unit tier types in a price or discount tag.  For example, for 0-100 units it's $1 each, and for all units above 100, it's $100 flat.  

• Starting Unit / Ending Unit: The defined range of this tier. The tiers are based on an "exclusive/inclusive" Starting and Ending Unit. 

  • By default, the Starting Unit starts from 0, instead of 1, in case that your UOM is not an integer. For example, if the Starting Unit is 0 and Ending Unit is 100, then the quantities fell into this tier are greater than 0, and less than or equal to 100.

  • If this is a term-based price or discount, then the Starting and Ending Unit use Subscription Term as the unit dimension.  For example, you can set Starting and Ending Unit as (0, 12] for the prices of the first year.

• Amount: The dollar amount of this tier.  

  • For a Price Tag, this sets of the prices (either per unit price, or a flat fee price for the entire tier);
  • For a Discount Tag, this sets dollar amount of the discount.

• Discount Percentage: The discount percentage of this tier.  Applicable only for Discount Tags.

Tiered, Volume and Ramp Pricing

What’s the difference between Tiered, Volume and Ramp pricing? This is probably the most commonly asked questions in (advanced) pricing strategies. 

 

When you create a Price Tag, you can pick from 3 price models: Tiered, Volume, and Ramp.  They look similar but at the same time very different. 

 

Volume pricing focuses on offering discounted rates as the quantity purchased increases. This model is commonly used in wholesale scenarios. For instance, buying a single watermelon may cost $2, but purchasing a dozen could give you a 10% discount. Similarly, buying 100 watermelons might result in a 20% discount, and so on.

 

Tiered pricing involves different price points assigned to various quantity tiers. This model is commonly utilized in usage-based pricing models. For example, in telecommunications, making less than 100 minutes of international calls may be free, while exceeding 100 minutes incurs a charge of $0.10 per minute. However, if the usage surpasses 1000 minutes, the price is capped at $100 per month.

 

Ramp pricing is specific to subscription-based services, allowing users to "get in" with lower prices, often including free trials. Over time, as users continue to use and derive value from the product, the company gradually raises the price, for example with a yearly increase of around 5% over the previous year.  

 

Remember we can layer price tags together just like those green/yellow/red tags in a grocery store. In Nue you can easily achieve complex pricing like this:

• If you purchase a medical device, we throw in 100 minutes of the device usage for free monthly for the first year. 

• If your monthly usage exceeds 100 minutes, we offer 10% discount for each additional minutes.  

• The price will increase by 10% each year.

Pricing Scenarios

To help you better understand how to user price and discount tags, we provide the following user scenarios.  

Scenario #1: Volume Pricing

For product A, for quantity under 100 units, it’s $100 flat fee; for quantities between 101 - 200, it’s $0.8 per unit, 201-300, it’s $0.5 per unit; and $0.4 for quantities over 300.

 

• If a customer orders 50 units of product A, then it’s $100;
• If a customer orders 250 units of product A, then it’s $250 * 0.5 = $125

To achieve this, we create a discount tag as the following: 

 

Price Tag

 

Tier Type	UOM Dimension
Volume	Quantity

 

Price Tiers

 

Tier #	Price Model	Starting Unit	Ending Unit	Amount
1	Flat Fee	0	100	100
2	Per Unit	100	200	0.8
3	Per Unit	200	300	0.5
4	Per Unit	300		0.4

 

Scenario #2: Tiered Pricing

For product B, for quantity under 100 units, it’s $100 flat fee; for the 101st to 200th units , it’s $0.8 per unit, 201st-300th, it’s $0.5 per unit; and $0.4 for 301st above.

• If a customer orders 50 units of product A, then it’s $100;
• If a customer orders 250 units of product A, then it’s 100 + 100 * 0.8 + 50 * 0.5 = $205

To achieve this, we create a discount tag as the following: 

 

Price Tag

 

Tier Type	UOM Dimension
Tiered	Quantity

Price Tiers

 

Tier #	Price Model	Starting Unit	Ending Unit	Amount
1	Flat Fee	0	100	100
2	Per Unit	100	200	0.8
3	Per Unit	200	300	0.5
4	Per Unit	300		0.4

Scenario #3: Volume Percentage Discounting

For product C, the original price is $1, 10% discounts will be applied if 100+ are ordered; 20% discounts will be applied if 1000+ are ordered.

 

• If customer orders 50 units of product C, it’s $50;
• If customer orders 150, then it’s 150 * 0.9 = $135; 
• If customer orders 1500, then it’s 1500 * 0.8 = $1200

To achieve this, we create a discount tag as the following: 

 

Discount Tag

 

Tier Type	UOM Dimension
Volume	Quantity

 

Discount Tiers

 

Tier #	Price Model	Starting Unit	Ending Unit	Amount	Discount Percentage
1	Per Unit	0	100	N/A	0%
2	Per Unit	100	1000	N/A	10%
3	Per Unit	1000		N/A	20%

 

Scenario #4: Volume Amount Discounting

For product D, the original price is $1.  For 100+ units ordered, there will be a $25 discount; For 1000+ units ordered, there will be a $300 discount.

 

• If a customer orders 50 units, then it’s $50;
• If a customer orders 150 units, then its $150 - $25 = $125
• If a customer orders 1500 units, then its $1500 - $300 =  $1200 

To achieve this, we create a discount tag as the following: 

 

Discount Tag

 

Tier Type	UOM Dimension
Volume	Quantity

 

Discount Tiers

 

Tier #	Price Model	Starting Unit	Ending Unit	Amount	Discount Percentage
1	Flat Fee	0	100	0	N/A
2	Flat Fee	100	1000	25	N/A
3	Flat Fee	1000		300	N/A

 

Scenario #5: Term-based Discounting

For a recurring product E, we price it for $25 User/Month.  

 

The default subscription is 12 months.  If a customer signs a 2-year subscription contract, then they receive 5% discount on the second year; if a customer signs a 3-year subscription contract, then they receive a 10% discount on the 3rd year. 

 

Moreover, if a customer subscribes to over 100 users, they will receive 10% overall discounts; If a customer subscribes to over 200 users, they will receive 20% overall discounts.

 

For example, 

If a customer subscribes to 150 users for 2 years, then their order total is: 

• Original Price Total: $25 * 150 * 24 = $90,000
• Term Discounts: $25 * 150 *12 * 0.05 = $2250 (Only the second year has 5% Term Discounts)
• Quantity Discounts: 90000 * 10% = 9000
• Order Total = 90000 - 2250 - 9000 = $78,750

To achieve this, we’ll need to create 2 price tags: a quantity-based Discount Tag, and a term-based Discount Tag.  Both discount tags need to be applied to the product at design time.  

 

Discount Tag #1: Quantity-based Discount Tag

 

Tier Type	UOM Dimension
Volume	Quantity

 

Discount Tiers

 

Tier #	Price Model	Starting Unit	Ending Unit	Amount	Discount Percentage
1	Per Unit	0	100	N/A	0
2	Per Unit	100	200	N/A	10
3	Per Unit	200		N/A	20

 

Discount Tag #2: Term-based Discount Tag

 

Tier Type	UOM Dimension
Tiered	Term

 

Discount Tiers

Note that Starting and Ending Unit are measured in Month. 

Tier #	Price Model	Starting Unit	Ending Unit	Amount	Discount Percentage
1	Per Unit	0	12	N/A	0
2	Per Unit	12	24	N/A	5
3	Per Unit	24	36	N/A	10

 

Scenario #6: Ramp Pricing

For a recurring product F, we price it for $1200 User/Year. Optionally, customers can sign up for a 2-year or 3-year contract. Customers receive 10% off first the first year, but for each subsequent year, they receive 5% price increase over the previous year's price.

 

For example, if a customer subscribes to 10 users for 3 years, we will have: 

1. Pricing for the first year per unit: $1200.
2. Discount for the first year: 10% off the original price. Discounted price for the first year: $1200 - (10% * $1200) = $1200 - $120 = $1080.

To calculate the subsequent years' prices, we need to apply a 5% price increase over the previous year's price:

3. Second year per unit price: $1080 + (5% * $1080) = $1080 + $54 = $1134.
4. Third year per unit price: $1134 + (5% * $1134) = $1134 + $56.70 = $1190.70.

If a customer signs up for 10 user licenses, we can calculate the ACV and TCV for all three years:

TCV 
= ACV (Year 1) + ACV (Year 2) + ACV (Year 3) 
= ($1080 * 10) + ($1134 * 10) + ($11,907) 
= $10,800 + $11,340 + $11,907 = $34,047.

 

To achieve this, we'll create a term-based discount tag as follows: 

 

Discount Tag

Tier Type	UOM Dimension
Ramp	Term

 

Discount Tiers

 

Please note that: 

• Starting and Ending Unit are measured in Year.
• A negative discount percentage indicates a price increase.

Tier #	Price Model	Starting Unit	Ending Unit	Amount	Discount Percentage
1	Per Unit	0	1	N/A	10
2	Per Unit	1	2	N/A	-5
3	Per Unit	2	3	N/A	-5