Product creation is always the first step for any of the CPQ Solutions. This article will help you understand the steps to create a subscription product using Salesforce CPQ.
Salesforce CPQ enables Admins and Product Managers to configure various types of product offerings and services using out-of-the-box features.
Subscription Pricing is a pricing model where a Customer subscribes to use or access a certain product or service for a specific period of time at a pre-determined price.
Typically, Subscription Products are priced monthly or annually.
Examples
Software Licenses – Antivirus Software, Salesforce Licenses etc.
- Services – Car Annual Maintenance Contract, Netflix etc.
Subscription Product in Salesforce CPQ
CPQ provides additional custom fields on products that allow you to do subscription pricing.
| Product Field | Data Type | Description |
|---|---|---|
| Subscription Pricing | Picklist | Type of pricing to use for this subscription, either None, Fixed Price or Percent of Total. None means this product is NOT a subscription product. |
| Subscription Term | Integer | Term length of this subscription. Only applicable if the product is a subscription. A BLANK value means this product is NOT a subscription product. |
| Subscription Type | Picklist | Select the type of Subscription, either Renewable or One-time. Renewable Subscriptions transfers to Renewal Quotes. One-time Subscriptions will not. |
To enable a product to be ordered as a subscription product, Subscription Pricing, Subscription Term and Subscription Type fields have to be set up appropriately.
Subscription Pricing in Salesforce CPQ
Salesforce CPQ calculates the price of a subscription product based on Quote’s Subscription Term.
Subscription Product’s Price is calculated per below formula-
Subscription Product’s Price = (QST/ PST) * PQ * PLP
QST = Quote’s Subscription Term
PST = Product’s Subscription Term
PQ = Product Quantity
PLP = Product’s List Price
If a Product having List Price=$100, Subscription Term=1 and Quantity=10
is added on a quote having Subscription Term=6,
it’s net selling price = (6/1) * 10 * 100 = $6000
Use Case
Amy Adams works as a CPQ Administrator at Universal Containers (UC). UC wants her to add the APPLIANCE MONITORING product in its Product Catalogue with a List Price of $1000 per month. It is a subscription product and it’s selling price should change based on a combination of its Quantity added on a quote and the Subscription Term entered on a quote. Also, it should be available for selection on a quote having custom CPQ PriceBook.
Product Details:
- Product Name – Appliance Monitoring
- Product Code – MONITOR
- Product Family – Software
- List Price – $1000
How to Setup?
- Package Settings
- Navigate to Setup | Build | Installed Packages| Salesforce CPQ | Configure | Subscriptions and Renewals. Select Month as the value for Subscription Term Unit and Subscription Prorate Precision fields and click Save.
Salesforce CPQ Package Settings
- Navigate to Setup | Build | Installed Packages| Salesforce CPQ | Configure | Subscriptions and Renewals. Select Month as the value for Subscription Term Unit and Subscription Prorate Precision fields and click Save.
Navigate to Products Tab and click New Set Active checkbox to True. Keep the default values unchanged. Enter all the necessary information.
Subscription Pricing = Fixed Price
Subscription Type = Renewable
Subscription Term = 1
Product Creation Page
- Click Save & Add Price button. Enter Standard Price for this Product.
Standard PriceBook - Once you click Save button, you will be redirected to the Product Detail Page.
Product Detail Page - The next step is to add the price for this Product in a custom CPQ PriceBook. To do this, navigate to the Price Books related list on Appliance product and click Add to Price Book button. Select CPQ PriceBook from the list and click Select.
Custom PriceBook - Enter List Price for CPQ PriceBook and click Save.
Add Price in Custom PriceBook
Check it out in the Quote Line Editor
- Appliance Monitoring Quantity = 1, Quote Subscription Term = 6
- Navigate to an existing Quote having Subscription Term = 6 and click Edit Lines button/ create a new Quote with Subscription Term = 6 | click Add Products button | select the Appliance Monitoring product, click Select and you will be landing on the CPQ Quote Line Editor.
- Net Total = 6 (QST)/1(PST) * 1 (Quantity) * 1000 (Product’s List Price) = $6000
Quote Line Editor – Quantity = 1 | Quote Subscription Term = 6
- Appliance Monitoring Quantity = 5, Quote Subscription Term = 12
- Change the Quantity to 5 and Subscription Term to 12 in QLE and click Calculate, you can see the selling price i.e. Net Total is automatically calculated based on the quantity and quote’s subscription term.
- Net Total = 12 (QST)/1(PST) * 5 (Quantity) * 1000 (Product’s List Price) = $60000
Quote Line Editor – Quantity = 5 | Quote Subscription Term = 12
- Once done with the product selections and quantity changes, click Quick Save or Save to save the product configuration on a quote.
Product’s Subscription Term
Salesforce CPQ uses Subscription Term Unit package setting and product’s Subscription Term to determine the length of a subscription.
Example:
Set YEARLY subscription
- Set Subscription Term Unit package setting to Month and product’s Subscription Term to 12.
OR
- Set Subscription Term Unit to Day and product’s Subscription Term to 365.
Set MONTHLY subscription
- Set Subscription Term Unit package setting to Month and product’s Subscription Term to 1.
OR
- Set Subscription Term Unit to Day and product’s Subscription Term to 30.
Below are the different variations of Subscription product’s prices considering Subscription Term Unit package setting = Month.
| Quote’s Subscription Term (QST) in Months | Product’s Subscription Term (PST) in Months | Product Quantity | Product’s List Price (PLP) in $ | Calculation [(QST/PST) * PQ * PLP] | Product’s Net Total in $ |
|---|---|---|---|---|---|
| 12 | 1 | 5 | 100 | (12/1) * 5 * 100 | 6000 |
| 6 | 1 | 3 | 500 | (6/1) * 3 * 500 | 9000 |
| 12 | 12 | 4 | 1000 | (12/12) * 4 * 1000 | 4000 |
| 6 | 12 | 10 | 5000 | (6/12) * 10*5000 | 25000 |
Example 1: MONTHLY Priced Product
- Product name = Appliance Monitoring
- Subscription Term Unit package setting = Month
- Product’s Subscription Term = 1
Product Subscription Term = 1 - Product’s List Price = $100
Product List Price = $100 - Quote’s Subscription Term = 12
Quote’s Subscription Term = 12 - Product’s Price = 12/1 * 1 (Quantity)* 100 = $1200
Quote Line Editor – Monthly Priced Product
Example 2: YEARLY Priced Product
- Product name = Appliance Monitoring
- Subscription Term Unit package setting = Month
- Product’s Subscription Term = 12
Product Subscription Term = 12 - Product’s List Price = $5000
Product’s List Price = $5000 - Quote’s Subscription Term = 6
Quote’s Subscription Term = 6 - Product’s Price = 6/12 * 1 (Quantity) * 5000 = $2500
Quote Line Editor – Yearly Priced Product
Related Articles
Check out this article for more information on how Percent of Total Subscriptions are configured in Salesforce CPQ.