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Proration in CPQ Order Products
Salesforce Billing uses a prorate multiplier and other billing fields to calculate the order product’s billable unit price. Order products inherit the prorate multiplier of their parent quote lines. The order product’s prorate multiplier stays unchanged throughout a standard order. (Salesforce Billing Managed Package)
Billable Unit Price
Each quote line has a billable unit price, which represents the unprorated amount that bills in each billing period. When a customer orders a quote, the order product inherits the parent quote line’s Billable Unit Price value.
If the quote line’s charge type has a value of One-Time, the quote line’s Billable Unit Price matches its Total Price. If the quote line has a charge type of Recurring, Salesforce CPQ calculates its billable unit price as follows. All fields in this calculation are from the quote line.
Billable Unit Price = [(Total Price * Billing Frequency) ÷
(Prorate Multiplier * Default Subscription Term)]
When the quote line is ordered, the resulting order product inherits its billable unit price value from the quote line.
We use these numbers for each billing frequency value.
| Billing Frequency | Equivalent Value |
|---|---|
| Monthly | 1 |
| Quarterly | 3 |
| Semiannual | 6 |
| Annual | 12 |
Let’s start out with a simple example. A subscription product has a $100 price, subscription term of 12 months, and a quarterly billing frequency. A sales rep quotes it for 10 months in a CPQ org that uses monthly prorate precision (10/12). Our total price is ($100 / 12 * 10) = $83.33, so we use this billable unit price formula.
[($83.33 * 3) ÷ ((10/12) * 12)] = $25
With quarterly billing frequency, Salesforce Billing invoices the order product 4 times over its 10-month term. The first three invoices are each for the full billable unit price of $25. In the final quarter, Salesforce Billing invoices the remaining $8.33 to account for the 10th month.
The billing day of month also impacts proration, because it helps determine the order product’s next billing date.
- Advance Billing
- When you bill in advance, the Billing Day of Month field determines the next billing date
on or before the order product’s start date. For an order product that starts on May 23 with
an
01billing day of month, the next billing date is May 1. If the billing day of month is 12, the next billing date is May 12. - Arrears Billing
- If the order product is billed in arrears, Salesforce CPQ evaluates the order’s billing day of month to choose the nearest date after the order product’s start date. It then evaluates the order product’s billing frequency. Since our order product is billed monthly, its next billing date would be 06/01/19. If it was billed quarterly, its next billing date would be 09/01/19.
