Ever wondered how a phone bill calculates the final amount for calls, internet usage, or SMS? Possibly even how a SaaS platform determines monthly subscription charges?
Well, the magic or rather, the logic behind such implementations is loaded into a powerful tool called a rating engine, which could be considered the super smart calculator for the Billing economy.
Here’s how the magic occurs in the rating engine software
1 . Rate Cards
Service price lists are organized by different usage levels. Think of it as a menu, but with chosen services, at flat or tiered prices for different units or for different customers.
2 . Usage Data.
Events are captured by network elements and converted into Call Detail Records (CDRs) or Usage Detail Records (UDRs). These records include vital information like call date, time, duration, and parties involved.
3 . Rules Engine
It utilizes the rate card and usage data to calculate the final charges according to predefined rules.
Setting Up a Billing Engine
To get a billing engine operational, there are a few prerequisites that need to be configured.
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Set Up Your Rate Cards
Before maintaining and taking care of your rating and charging, catalogs get done. It is essential to set up your models for rating and charging. Such models may have rules and parameters that define how the charges are computed with respect to discussion areas, core and application charges, time charges expressed as end-user components in each service area, or usage charges based on individual services or usage portions. Reconcile business policy and goals, customer and market perception, and legal or regulatory requirements within your rating and charging models. Document your models clearly and consistently; keep them up-to-date with changes to products and services.
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A Centrally Located Catalog Management System
The key responsibility of a centrally-located catalog management system is to play the role of a central software application to store, access, modify, and further distribute rating and charging information across your billing system and every other system that you might need frequently, such as C.R.M., Order Management, Provisioning, and Mediation.
Accuracy, consistency, and efficiency in the processes of rating and charging are optimized centrally, which thus reduces errors and duplication and also tends to lower manual efforts.
How Rating Engines Work
A rating engine is one of the crucial elements of the billing system. It calculates the cost of a product or service the customer consumes based on the data provided by the subscriber. This is an automated process. Thus, it eliminates errors that were previously generated due to manual billing. Below is an easy process of the way a rating engine works –
➣ Data Collection – Gathering the Information
The process is initiated by gathering all the information regarding the usage. This information may be from diverse sources—such as real-time usage information, Near- real-time usage data, and data from CRM and ERP.
➣ Processing Data (Mediation Engine)
The data as gathered on usage may need formatting for uniformity. This mediation engine standardizes the format, making it comprehensible; hence, this facilitates smoother operation in billing.
➣ Rate Application – Choosing the Right Price Tag
This is the critical point at which the rating engine will look up the pre-built template of charges for various types of usage patterns, referred to as the rate card. The rate card includes
Tiered Rates: Varied rates that depend on designated usage limits
Time-based rates: these are dependent on the usage time, usually with high and off-peak rates.
➣ Charge Calculation – Determination of the Fees
Using the standardized data and relevant rates, the rating engine calculates the amount payable by:
Applying Rates: The usage data and rate card are applied to ascertain the charges for all the used segments.
Aggregation: The sum of all the calculated rates for specific usage calculated to find the whole amount.
➣ Invoice Generation – Bill Presentation
Therefore, the rating engine generates an itemized invoice that outlines all the charges.
The Importance of Rating Systems
▶ For Businesses
Businesses give guaranteed pricing that is fair and enables businesses to adjust prices for their customers based on demand, which means that businesses can operate in a very smooth fashion.
▶ For Customers
Businesses guarantee pricing based on actual use, preventing surprising charges. So customers are happy with services and increase the retention ratio because of trust in businesses.
So, where do you see these Hidden Engines at work?
They’re everywhere in the Billing economy. Rating engine software is integral to the billing economy, and one prime example is EarnBill. As a forward-thinking system, EarnBill represents the future of rating engines. It can manage their billing systems more effectively, reducing revenue loss and improving customer satisfaction.
EarnBill is continuously updating, it becomes smarter and more efficient over the period with the latest updates, ensuring fairer pricing. The next time you encounter dynamic or custom pricing, think of the next-gen rating engine working accurately behind the system to provide fair billing for everyone!
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