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 docid\ sjqd42uy0lh2ab2xxdioa 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 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 inline edit the net sales price or discount % directly for the ramp line item of each subscription year; 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 the user needs to be granted with edit price or discount tags custom permission in order to edit the discount tag in the line editor use case ramp pricing with renewal uplifts over negotiated discounts in many subscription businesses, sellers combine ramp based price uplifts with deal level discretionary discounts to balance long term revenue growth with short term incentives for the customer these uplifts are often subscription specific , meaning the percentage increases can vary from one contract or subscription to another based on the commercial agreement this is different from corporate level uplift policies , where standardized annual uplift percentages apply consistently across a customer segment (examples of corporate wide uplift policies can be managed using the price uplift setting ) because subscription based uplifts are negotiated individually, renewal pricing is expected to compound on the actual billed amount from the previous term rather than on a global uplift rate for example, consider a one year deal with a 20% discretionary discount and a subscription specific uplift schedule of 5% in the second year and 10% in the third year a product with a $10,000 list price would be sold for $8,000 in the first year after discounting at renewal, the expected second year price becomes $8,400, reflecting the 5% uplift applied to the previous term’s billed amount if the sales rep offers an additional 10% discretionary discount at renewal, the final second year renewal price becomes $7,560 on the third year renewal, the rep expects the uplift to again apply to the prior year’s actual billed price, resulting in a renewal price of $8,316 this use case highlights that subscription specific uplifts should apply to the total price charged in the previous subscription term , ensuring that both negotiated uplifts and discretionary discounts are carried forward accurately through each renewal cycle to support this renewal behavior, customers must enable the “recalculate price using current list price and pricing logic” setting along with the option to apply original discretionary discounts by default, discretionary discounts are not reapplied when creating a change order, so enabling this setting ensures that ramp based uplifts are calculated on the correct discounted total and that renewal pricing reflects both the uplift tags and any previously applied discretionary discounts to enable this settings, you can follow the steps below login to nue app and navigate to settings search for change order pricing logic in settings select the following recalculate price usingcurrent list price and pricing logic for all or filtered products it is important to check both checkboxes in this setting to ensure that the ramp based price tag will be applied after the original discretionary discounts are applied