Pricing models you use today, or that you may be contemplating for the future, have a direct impact on your revenue recognition operations. Often, we find that pricing and revenue teams don't collaborate early enough or often enough to understand the implications of changes occurring in each other's worlds. This session will walk through 4 common pricing concepts, the revenue implications of each, and practical tips on how to achieve better alignment between your pricing team's goals and the result impact to your revenue operations.

2. Aligning Pricing And Revenue :
Two Sides Of A Very Valuable Coin
Monika Saha
VP/GM, Finance Product Line,
Zuora
Jennifer Meehan
Senior Manager, Technical Accounting,
Zuora

3. NEW RULES. BROAD
CONSEQUENCES.
TIMING OF REVENUE
Microsoft’s revenue could be higher than previously
stated
REVENUE ELEMENTS
Uber’s revenues may be lower under new accounting
rules
TREATMENT OF COSTS
Cloud companies could benefit by deferring more
costs

4. Pricing And Packaging Decisions
Impact Revenue Recognition

5. PRICING TEAMS REVENUE TEAMS
Often unaware of the revenue impacts their
decisions will have
Often unfairly seen as “blockers”
or “Dr. No”
In revenue, it is NOT easier to ask for forgiveness than permission. Chances are that revenue teams will
Have a solution for you that works for both sales/pricing and the company’s revenue recognition policies

6. It helps to get your business
partners aligned on these
topics
page
06
01contract structures
Some pull in revenue sooner than others.
03Bundling and
discountingParsing becomes just as important as
bundling.
02
standalone selling price
Why it matters and why your business
partners should care
04usage pricing
Estimation and true-ups are the name of the
game

7. THE CHALLENGE WITH DIFFERENT
CONTRACT STRUCTURES
Pricing, billing and revenue amounts don’t always align within
periods
Non-standard one-off contracts increase revenue recognition
complexity
Some contract structures have a more positive impact on
revenue than others
Revenue teams are not always involved in designing the
contracts
1
2
3
4

8. Example : Managing Ramp Contracts
EQUIPPED TO CALCULATE EFFECTIVE
REVENUE PRICE …. AT SCALE
COMMUNICATING WHAT CRITICAL DATA YOU NEED YOUR
SALES TEAMS OR ORDER MANAGEMENT TEAMS TO
CAPTURE
EQUIPPED TO AUTOMATE THE PROCESS OF
EVALUATING HOW EXISTING OPEN CONTRACTS
MIGHT HAVE DIFFERENT REVENUE TREATMENTS
UNDER THE NEW GUIDANCE VS THE OLD GUIDANCE
MAKE SURE YOU ARE:

9. USE CASE
A bundled deal with unit ramp
This is a view of the Revenue Contract captured
in RevPro:
• The 3 year ramp deal is captured in a single
contract. You case see each ramp-up in
quantity here.
• Since RevPro decouples billing from revenue,
you can use revenue triggers here to properly
account for revenue each period, independent
from invoicing.
• The total amount billed to date for this contract
is $18,000 while the total revenue to date is

10. It helps to get your business
partners aligned on these
topics
page
010
01contract structures
Some pull in revenue sooner than others.
03
Bundling and
discountingParsing becomes just as important as
bundling.
02
standalone selling price
Why it matters and why your business
partners should care
04
usage pricing
Estimation and true-ups are the name of the
game

11. THE CHALLENGE WITH DETERMINING
STANDALONE SELLING PRICE
It doesn’t always map to list price
The effort is often time consuming and inefficient
The quality of historical pricing data does not lend itself to easy
analysis
1
2
3

12. Determining Standalone Selling Price
AUTOMATICALLY COLLECT, ANALYZE
AND APPLY HISTORICAL DATA TO
FUTURE CONTRACTS
AUTOMATE THE PROCESS OF DETERMING PRICING
COMPLIANCE RATES AND BANDS AND SHARE
RESULTS WITH YOUR BUSINESS PARTNERS
AUTOMATE THE PROCESS OF APPLYING RULES
BASED FORMULAS TO CALCULATE SSP FOR
DIFFERENT ELEMENTS IN DIFFERENT SCENARIOS
MAKE SURE YOU CAN:
Ext Price SSP % Of Total Price Allocation
PRODUCT A $1,100 $1,200
$1,200/$2,160 =
56%
$1,900 * 56% - $1,055
PRODUCT B $700 $800 $1800/$2,160 = 37% $1,900 * 37% - $705
PRODUCT C $100 $160 $160/$2,160 = 7% $1,900 * 7% - $140
TOTALS $1,900 $2,160 100% $1,900

13. USE CASE
Calculating Standalone Selling Price
This is a view of the complete Revenue
Contract collected and grouped in RevPro:
• All transaction lines are automatically
grouped together and assigned to a
Performance Obligation through previously
configured setups.
• Each Performance Obligation is
systematically:
• Assigned a Standalone Selling Price
(SSP)
• Evaluated as a whole against the
contract

14. It helps to get your business
partners aligned on these
topics
page
014
01contract structures
Some pull in revenue sooner than others.
03
Bundling and
discountingParsing becomes just as important as
bundling.
02
standalone selling price
Why it matters and why your business
partners should care
04
usage pricing
Estimation and true-ups are the name of the
game

15. THE CHALLENGES OF MANAGING
DISCOUNTS & BUNDLING
1
2
3
Parsing bundles for revenue recognition
Inconsistent bundles and inconsistent discounting practices
Bundles designed without consideration for revenue impacts

16. Managing Impacts Of Discounting &
Bundling
SYSTEMACTICALLY EXPLODE BUNDLES
INTO DISTINCT ELEMENTS
AUTOMATE THE PROCESS OF APPLYING SSP TO EACH
ELEMENT IN A BUNDLE
AUTOMATE THE PROCESS OF ALLOCATING
TRANSACTION PRICE ACROSS THE APPROPRIATE
ELEMENTS IN A BUNDLE
MAKE SURE YOU CAN:

17. USE CASE
Bundle Config / Explosion
This is a view of a subscription line which was
broken out systematically into a license line
and a support line RevPro:
• There now exists one parent line and two
child lines
• Each element is now able to have its own
revenue event and recognition methodology
• Can be configured to split sell price between
lines or simply rely on element level SSP
allocations

18. It helps to get your business
partners aligned on these
topics
page
018
01contract structures
Some pull in revenue sooner than others.
03
Bundling and
discountingParsing becomes just as important as
bundling.
02
standalone selling price
Why it matters and why your business
partners should care
04
usage pricing
Estimation and true-ups are the name of the
game

19. THE REVENUE CHALLENGES OF
USAGE PRICING MODELS
1
2
3
Guidance is not 100% clear
Not enough data to determine variable consideration
Metering and rating automation don’t always help with revenue
automation

20. Managing The Impacts Of Usage Pricing
DETERMINE VARIABLE CONSIDERATION
AT THE ONSET OF A CONTRACT
APPLY VARIABLE CONSIDERATION FOR DIFFERENT
FLAVORS OF USAGE PRICING MODELS
MAKE SURE YOU CAN:
DETERMINE YOUR METHOD OF REVENUE RECOGNITION
EARLY (e.g. PRACTICAL EXPEDIENT OR NOT)

21. USE CASE
Variable Consideration
This is a view of a contract in RevPro with
Variable Consideration:
• The Price Adjustment as a result of Variable
Consideration is captured here.
• The resulting total Transaction Price is
calculated here.
• The line level details for each Variable
Consideration action are retained for audit
purposes within the workbench.

22. Summary Of
Recommendations
1. Include revenue team representatives on your pricing committee
2. Establish templates and processes to model deals from sales all the way through
revenue
3. Ensure that revenue team representatives are involved in deal structuring
4. Or…. Consider a materiality threshold to include revenue teams during the deal
structuring process to avoid downstream issues
5. Revenue teams do not want to be a roadblock - ASC 606/IFRS 15 is new to
everyone - this is a great opportunity to evolve the way revenue and pricing teams
work together
6. Consider holding mini ASC 606/IFRS 15 training sessions, where both revenue
and pricing teams collaborate for company best practices - everyone wins!

23. THANK YOU
QUESTIONS?