Billing Hierarchy Modes for Parent/Child Accounts

When you attach Plans to either a Parent or Child Account, you can use the Account hierarchy billing mode setting to chose for different billing hierarchy modes - for more details, see Attaching Plans to Accounts. The billing hierarchy mode you select then determines how billing will be handled and shown on bills as between charges due for the Parent Account and charges due for Child Accounts. This topic explains the different billing hierarchy modes you can set up for Parent/Child Accounts. The way in which Bills are calculated and compiled for Parent and Child Accounts depends upon two conditions:

• Account Plan Location. Whether you’ve attached a priced Plan to create an Account Plan for the Parent Account or for the Child Account:
  • If the Parent Account has an Account Plan and the Child Account does not, then any Child usage will be rated at the Parent level. Note that if Child usage is bundled up into a single block in this way, it means the Child Accounts might be able to take advantage of lower rates under a tiered pricing structure that, if rated independently, they would not have reached. See the Rating Usage as a Block section below.
  • If a Child Account has an Account Plan, then its usage is rated independently.
• Billing Mode. When you attach a priced Plan to either a Parent or a Child Account to create an Account Plan, billing mode settings allow you to control how Bills at either Parent or Child level are compiled from line items calculated for either Parent or Child usage. See the Billing Modes sections below for full details.

The combination of Account Plan location and Billing Mode settings gives you wide flexibility on how usage as between Parent and Child Accounts is charged and compiled into Bills. Some Example Billing Scenarios are provided below to help you set up Parent/Child Account billing to correctly meet your specific billing use cases.

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Billing Modes

Billing mode settings are available when you attach a Plan to a Parent/Child Account to create an Account Plan.

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Billing Modes for Parent Accounts

In the Console, when you attach a priced Plan to a Parent Account to create an Account Plan, you can use the Account hierarchy billing mode setting to control how bills for usage charges under the Account Plan are processed:

• Bill parent account - bill line item per account. This creates a “Parent Bill Breakdown” billing format. Usage data is rated at the Parent level, and multiple line items are added to the Parent - one per Child - with an “average” unit price applied. Default setting.
• Bill parent account - single bill line item for all accounts. This creates a “Parent Bill Summary” billing format. Usage data is rated at the Parent level - usage for children is treated as a single block of usage - and a single line item is added to the Parent bill representing the total of all the Child usage for the Plan.
• Bill child account. Usage data is rated at the Parent level, but the line items appear on the Child bills instead of on the Parent.

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Billing Modes for Child Accounts

In the Console, when you attach a priced Plan to a Child Account to create an Account Plan, you can use the Account hierarchy billing mode setting to control how bills for usage charges under the Account Plan are processed:

• Bill parent account - bill line item per account. Usage data is rated at the Child level, and multiple line items are added to the Parent - one per Child - with an “average” unit price applied. Default setting.
• Bill parent account - single bill line item for all accounts. Usage data is rated at the Child level - that is, each Child is rated for its own usage individually - and a single line item is added to the Parent bill representing the total of all the Child usage for the Plan:
  • Note: We only “summarize” line items for the same plan, so if different children each have their own custom Plans, it won’t get summarized because we can’t tell which line items should be merged with each other.
• Bill child account. Usage data is rated at the Child level, but the line items appear on the Child bills rather than on the Parent.

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Setting Billing Mode using API Call

You can use the childBillingMode request parameter in the Create AccountPlan call to set the billing mode for your Parent Child Account:

• PARENT_SUMMARY
• PARENT_BREAKDOWN
• CHILD

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Example Billing Scenarios

This section describes six Parent/Child billing scenarios to help you decide which best suits your billing use case. Scenario 1: Parent bill has single line item representing usage for all children, rated as a single block

• Account Plan Location:
  • Parent Account has Account Plan.
  • Child Accounts do not have Account Plans.
• Billing Mode. When you create the Account Plan for the Parent Account, select Bill parent account - single bill line item for all accounts. This means:
  • Bills will be created for the Parent Account.
  • Usage data is rated at the Parent level.
  • All Child usage treated as a single block of usage.
  • A single line item is added to the Parent bill representing the total of all the Child usage for the Plan.

Scenario 2: Parent bill has single line item representing usage for all children, rated independently

• Account Plan Location:
  • Parent Account does not have Account Plan.
  • Child Accounts have same priced Plan attached for Account Plans.
• Billing Mode. When you create Account Plans for Child Accounts, select Bill parent account - single bill line item for all accounts. This means:
  • Bills will be created for the Parent Account.
  • Usage data is rated at the Child level.
  • Each Child is rated for its own usage individually.
  • A single line item is added to the Parent bill representing the total of all the Child usage for the Plan.

Scenario 3: Parent bill has line item per child, rated as a single block

• Account Plan Location:
  • Parent Account has Account Plan.
  • Child Accounts do not have Account Plans.
• Billing Mode. When you create the Account Plan for the Parent Account, select Bill parent account - bill line item per account. This means:
  • Bills will be created for the Parent Account.
  • Usage data is rated at the Parent level.
  • Multiple line items are added to the parent - one per child - with an “average” unit price applied.

Scenario 4: Parent bill has line item per child, rated independently

• Account Plan Location:
  • Parent Account does not have Account Plan.
  • Child Accounts have Account Plans.
• Billing Mode. When you create Account Plans for Child Accounts, select Bill parent account - bill line item per account. This means:
  • Bills will be created for the Parent Account.
  • Usage data is rated at the Child level.
  • Each Child is rated for its own usage individually.
  • Multiple line items are added to the bill - one per child - with an “average” unit price applied.

Scenario 5: Child bills each have a line item representing their own usage, rated as a single block

• Account Plan Location:
  • Parent Account has Account Plan.
  • Child Accounts do not have Account Plans.
• Billing Mode. When you create the Account Plan for the Parent Account, select Bill child account. This means:
  • Bills will be created for Child Accounts.
  • Usage data is rated at the Parent level and line items appear on the Child bills rather than on the Parent.

Scenario 6: Child bills each have a line item representing their own usage, rated independently

• Account Plan Location:
  • Parent Account does not have an Account Plan.
  • Child Accounts have Account Plans.
• Billing Mode. When you create Account Plans for Child Accounts, select Bill child account. This means:
  • Bills will be created for the Child Account.
  • Usage data is rated at the Child level and line items appear on the Child bills rather than on the Parent.

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Rating Usage as a Block

This section explains how usage rating as a block for Child Accounts will be calculated and compiled into bill line items. Some common use cases for Parent/Child Account billing where usage is rated as a block across all Child Accounts at the Parent level - such as Scenario 3 above - allow Child accounts to take advantage of discounted usage rates in higher tiers. These are those cases where they would not have qualified for the discounted usage rates, had they been rated independently. Here’s a simple example to illustrate how this works. Suppose you have an end customer Parent Account with two Child Accounts - A and B:

• The Account Plan you use to charge has the following two-tiered pricing structure:
  • Tier 1: $1.00 per unit for usage up to the first 1000 units.
  • Tier 2: $0.90 per unit for any usage above 1000 units.
• For the current billing period:
  • A consumes 900 units.
  • B consumes 500 units.
• If we attach the Account Plan to each of the Child Accounts and charge them independently:
  • A pays $900 and B pays $500 for a total of $1400.
• If we attach the Account Plan to the Parent Account and charge them as a single block of usage:
  • Total usage is 1400 units, and this is all rated as a block amount against the Account Plan - 1000 units @ $1.00 and 400 units @ $0.90. Total cost is therefore $1360 across both Child Accounts.
• For billing when charging as a single block, the total payable is then split across the Child Accounts and proportionately to their respective usage:
  • A would be charged 1360*(900/1400) = $874.29 (less than the $900 when rated independently)
  • B would be charged 1360*(500/1400) = $485.71 (less than the $500 when rated independently)