Subscriptions are a widespread business model for selling goods and services. It is important that a cloud billing platform support different use cases of business requirements. Essentially, a subscription represents a contract or a commitment of a customer to perform periodic payments for desired goods and services.
When configuring subscriptions, it is common to define terms which explain rules and limitations for subscriptions that customers purchase, such as the following:
- definition of commitment and grace period,
- renewals that are processed after the subscription expires
- penalty fees for early termination actions.
In many cases, customers purchase subscription-based deals with a commitment period and get discounts or special products in return. The subscription provider expects that the customer will commit to use its services for a longer period; however, if the customer decides to cancel before the end of the agreed commitment period, an early termination fee can be charged.
Tridens Monetization offers flexible configuration of terms
In Tridens Monetization cloud billing platform, terms can be applied to plans or add-ons. Add-ons that are purchased to a new or existing subscription can have their own terms, which are also processed individually.
The commitment period can be expressed in days, months, or years. The grace period, during which the customer can cancel the subscription without any additional charges, can also be defined. Both values are set at purchase time, relative to the subscription validity start time, and can be calculated either as an actual time difference or as a time difference that is limited to the billing cycle.
When the subscription is canceled, Tridens Monetization automatically checks the applied terms and charges an early termination fee if the customer cancels the subscription before the end of the commitment and out of the grace period. Such charges can be assigned to General Ledgers to allow easier tracking and accounting. The item that holds information about plan or add-on termination will be available on the invoice.
After the commitment expires, it is possible to automatically renew the purchased subscription. The renewal can be performed under the same or different terms and optionally, even without them.
Consider the following example in which the customer purchases two subscriptions on a plan with a term that requires a two-year commitment, 14 days of grace period and an early termination fee of 200 EUR in case of cancellation before the end of the commitment. Both subscriptions are valid immediately.
| Action | Date of Event | Result |
|---|---|---|
| Purchase subscription on Plan A | July 1, 2019 | Commitment ends on June 30, 2021 |
| Cancel subscription on Plan A | July 10, 2019 | Subscription is canceled within grace period without any penalty charges. |
| Purchase subscription on Plan B | July 10, 2019 | Commitment ends on July 9, 2021 |
| Cancel subscription on Plan B | June 30, 2020 | Subscription is canceled with penalty charge. |
At purchase, the commitment is set. If the customer decides to cancel the purchased subscription within 14 days of the grace period, no fees will be charged; however, if the termination occurs sometime later, the customer will be charged with an early termination fee. This charge can be either the full amount or the prorated one, based on the date of early termination and commitment end.
