Price Modeling

Price Modeling is an indispensable tool for any business operating on a usage-based model today or considering transitioning to usage-based pricing in the future. It allows users to forecast and compare the impact of different pricing plans by comparing the result of the plans on real historical usage data.

It is important to note that Price Modeling applies the rates in the selected pricing plans to historical usage from the Metering service to generate what the revenue generated from that plan would be over the given time interval. This means that before you can model a pricing plan, you must first ensure that you ingest meters (usage) for the associated pricing plan.

To access Price Modeling, navigate to the Analytics tab from the Console menu. A drop-down will appear with Price Modeling as one of the options. After clicking this, you will be brought to a list of all the models created on the account. You can view, edit, and share existing models or create an entirely new price model.

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To create a new model, give a model name and select which plans will be analyzed. You have the option to model a single plan or compare the results from two different plans. You then select the scope of the model. By default it is applied to all customers, but if you would like a more granular analysis, you can restrict the model to run on only the customers associated with given pricing plans or even to only specific customers.

You can model pricing plans in either 'Active' or 'Draft' mode. Active plans are locked to changes and can be used live in production on customers. Draft plans are not yet live and can still be edited. If you model draft plans, you will be able to tweak and modify the plans directly from within the price model by selecting the edit option shown for each respective product item (indicated with pencil icon). This is shown in the screenshot below.

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After the pricing plans are ready to be compared, select Save and Run Model to see the model results. You can choose whether the output is shown as a line graph or bar graph. You can filter the model results by any date range to see results over the day/week/month/quarter or custom date range.

There are three options to break down the model results. The first is to compare at the pricing plan level. This option shows revenue generated by the selected pricing plan over the given time range. The second option breaks down the model output by product item. This allows for a line-item-by-line-item comparison of model results between plans and helps identify how individual products are contributing to top-line revenue. The third view is to compare the results by customer. This allows users to visualize and compare how different plans impact individual customers or segments.

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