Rating Engine

The billing industry relies heavily on the rating engine for all billing computations, which acts as the central processing unit of the billing engine. In other words, the rating engine is one of the core components of the billing system, which takes a multitude of factors into account when determining what a customer owes. The job of a rating engine is not basic arithmetic calculations; instead, it goes far beyond simply multiplying a price by a quantity. For example, a customer on a mobile plan is supposed to be charged per minute once the free calls for the first 500 minutes are over.

The EarnBill rating engine is all about pricing models and usage-driven charging to determine the appropriate charges based on various factors like customer data (subscription plans), usage details (minutes talked, data consumed), time-based rates (peak and off-peak hours), and even route-based rates (rate cards). Also, the engine applies applicable discounts, taxes, late fees and penalties, and prior credits, if any, to ensure the final invoice is accurate and reflects every detail of each customer’s service usage. This complicated data analysis and calculation ensures that the customers are happy to see fair charges with transparency, and the companies are pleased with the accuracy of final bills.

The EarnBill plugin-based rating engine is robust yet flexible enough to serve diverse use cases across different business sectors. That further helps businesses try different ratings (through simple configuration changes) for new ideas/approaches in billing computations and decide on the right strategy that aligns with their business plans and something that keeps customers engaged in the competitive market.

The EarnBill rating engine and charging performs complex logic on actual consumption (usage) data using algorithms (pricing models) to arrive at charges. Also, EarnBill’s customizable framework supports its rating engine to serve the most complex billing use cases and scenarios for all sizes of businesses. For example, let’s look at utility sector companies and how they charge for electricity and water consumption.

They both follow a similar approach for rating and charging, which includes the basic fee (monthly subscription) and a tiered pricing strategy based on usage. Typically, the companies install smart meters for water and electricity (with IoT-embedded devices) at the customer end to keep a tab on consumption and transmit the data to the server for charging purposes (billing).

For instance, a water company uses the below pricing strategy as per usage per month for domestic consumers.

Tiered Rating Model:
0-100 liters => $0 (free)
100-130 liters => $0.25 per liter
131-200 liters => $0.50 per liter

The usage calculation would look like the below when utilizing 180 liters of water.

Usage Charging:
Total Consumption = 180
1st tier is free => 180 – 100 = 80 (actual chargeable units).
2nd tier charges => 30 liters * $0.25 = $7.5
3rd tier charges => 50 liters * $0.50 = $25
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Total Charges = $32.50
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Considering the above example, the EarnBill system stores the usage from the beginning, even if the usage initially falls under the free tier. Still, the IoT device keeps sending usage data from day one since it needs to know when consumption reaches the free limit and enters the chargeable tier. After that, the rating engine accordingly performs all computations on actual usage as per the applicable tier using a defined pricing strategy.

SaaS companies often use various rating models depending on their use cases and business objectives. The most preferred billing model is subscription-based, along with rating strategies like freemium, tiered, per-user, usage-based, and flat rate. It depends on the type of SaaS business model and variations to cater to different sectors. Flat-rate charging is simple, where everyone pays the same price—a “one size fits all” approach regardless of features and consumption. Another rating and charging model is a per-user basis, which means the system charges a flat rate per user for accessing the software services. It works well for team-based applications that are more driven by the number of users.

Furthermore, SaaS businesses are dealing with feature-packed higher plans and usage-based charging approaches, which require more complex calculations using a tiered pricing strategy. Let’s consider a use case where a company offers various subscription plans (based on features) coupled with storage space on the cloud and calculates charges based on the amount of storage space utilized. EarnBill’s rating engine empowers companies to scale rating and charging capabilities for future requirements with its flexible and out-of-the-box features.

Burstable bandwidth billing is another use case, which is a cost-effective way to support increased traffic load by scaling bandwidth automatically as needed. In that case, the rating engine uses a complex charging method to calculate charges based on 95% usage. So basically, a customer gets a short period of high bandwidth to support traffic load or fluctuations, provided the burst should not continue for a long duration (as per the allowed quota in hours for a given monthly billing cycle).

Now, to charge burstable use cases, the EarnBill system keeps track of the bandwidth utilization and the burst period, then ignores the top 5% of utilization peaks (large bursts) and calculates charges based on 95% usage to bill the customer. The rating engine charges the entire usage if it crosses the permissible limit (above 5%). The EarnBill enables businesses to implement complex use cases based on the company’s rules using its plugin-based framework without affecting the system’s operations.

In today’s age of evolving technologies and competition, the system should also be flexible enough to accommodate every business scenario while knowing that the usage patterns are very dynamic and consumers are looking for cost-effective pricing. To overcome these challenges and establish a future-proof charging system, EarnBill offers a highly flexible rating engine with numerous built-in pricing strategies, rating configurations, and customizable options to meet your unique needs and be on top of the competition.