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Subscription Ramp Pricing

Subscription Ramp Pricing

 

Subscription ramp pricing is a pricing strategy used in the subscription-based business model, where a company charges its customers a gradually increasing price over time for its products or services. The aim of subscription ramp pricing is to encourage customers to sign up early and incentivize them to continue using the company's services for a longer period of time. The price increase can be gradual and incremental, or it can be more significant, depending on the company's goals and pricing strategy.

 

For example, a company offering a cloud-based software solution may offer new customers a low introductory price, which then increases over time as the customer continues to use the service. This approach can help the company to balance its pricing strategy, retain customers and generate more revenue over the long term.

 

It's important to note that subscription ramp pricing is just one of the many pricing strategies that companies can use, and the effectiveness of this strategy will depend on various factors, such as the product or service offered, the target market, and the company's overall business model.

 

 

With Nue Price Builder, users can create a Discount Tag to support Subscription Ramp Pricing. This Discount Tag can be customized to reflect the specific discount and price increase percentages that the seller wants to apply to their subscription pricing.

 

Create Pre-defined Discount Tag

 

For example, a users may create a Discount Tag that offers a 10% discount on the first year of a subscription and then increases the price by 5% each subsequent year. This pricing strategy incentivizes customers to commit to a longer-term subscription while still ensuring that the seller is capturing the full value of their product or service.

 

To configure a Discount Tag for the Subscription Ramp Pricing, login into Nue app, and navigate to Price Builder → Discount Tags.

  • Click 'New Discount Tag' to create a new discount tag.
  • Enter discount tag name: '3-Year Subscription Ramp Pricing (YEAR)'
  • Select UOM Dimension as 'Term'
  • Select Price Model as 'Ramp''
  • Add the discount tiers:
    • 0-1, 10% per unit
      • 10% discount for the first year
    • 1-2, -5% per unit
      • Negative discount indicate a price increase over the last year
    • 2-3, -5% per unit
  • Click 'Save'

 

You can now add this discount tag to one or more of the following: 

  • A Price Plan of a Bundle
  • A Price Book Entry of a Product
  • A Product Option
  • A Product Group
  • A Quote Line Item
  • An Order Product

Apply the Discount Tag to a Product or Bundle

You can follow the steps below to apply the Subscription Ramp discount tag to a product or bundle.

  • Navigate to the Product Catalog page in the Nue Price Builder
  • Find the product or bundle to which you want to apply the price increase and click the Edit button
    • If you are applying a Discount Tag to a product, go to the Prices screen, click on the Discount Tag icon, and add the Discount Tag that you just created.
    • If you are applying a Discount Tag to a bundle, go to the Price Plans screen and click on the “Add Discount Tag” button.

Now you can create a quote in Nue on Salesforce to test the Discount Tag.  

 

  • Proceed to create a quote in Salesforce.  Go to the Nue on Salesforce app and navigate to the Opportunity for which you want to create a quote.
  • Click on the New Quote button in the top-right corner and enter all the appropriate information. Click on “Save and Next”.
  • Use the Search Product search bar on the right side of the screen to find the product you want to enter in the quote. 
  • Change your subscription term to 24 months or 36 months. Notice that there are several Ramp Line Items displayed that will represent each year of the subscription and the price of each year.
  • The System Discount is the price increase in Year 2 and Year 3.

 

  • You can also see the Discount Tag applied by clicking on the Discount Tag icon (the icon with $ sign) to the left of the product name.
    • In the Discount Tag popup, you can see that all 3 price tiers are being applied to the line item. The Price Impact shows how much discount is generated by this Discount Tag. 

 

Create Custom Discount Tag

In the case that you want the Sales Rep to negotiate and define a custom ramp pricing, you will create a Discount Tag to represent each year of the subscription. In this case, the discount is 0% (since it is not predefined). This will allow the Sales Rep to define their own price increase. 

 

  • Follow the same steps as in the previous section for creating a discount tag in Nue.
  • However, in this case, the Discount Percentage is Zero for all 3 years.
  • Once that Discount Tag is created and applied to a product or bundle, follow the same steps as in the previous section to create a quote.
  • In the quote, you will see a separate line for each year of the subscription term. The Net Sales Price (or Discount % or Discount Amount) can now be adjusted for Year 2 and 3.  

A Sales Rep can have 2 options to adjust the discount for each subscription year: 

  1. Inline edit the Net Sales Price or Discount % directly for the ramp line item of each subscription year; 
  2. Click the Price Tag icon to open the Price Tag Popup.  Click 'Edit Discount Tag', and click 'Edit Tiers'.  In this popup, the user can add tieres, and change the discount % for each tier.  Please note that when the user creates 'Edit Discount Tag', Nue creates a custom discount tag just for this line item, so that one user's customization will not affect other users.