How unit-based prepaid with drawdown works

With unit-based prepaid with drawdown, you configure:

• a prepayment charge that creates the prepaid fund
• a usage charge with charge function Drawdown that consumes from that fund
• subscription-level options that let you override selected charge settings when you place an order
• account-level monitoring that helps you track balances, consumption, rollover, and overage

Key concepts

• Prepayment charge: A prepayment charge is a one-time or recurring charge with charge function Prepayment. It is the charge your customer pays to receive prepaid units.
• Fund: A fund is the time-boxed balance created from a prepayment charge. The fund holds the prepaid units that can be consumed during its validity period.
• Usage charge: A usage charge with charge function Drawdown consumes units from the funds created by the prepayment charge.

Key capabilities of Enhanced Unit-Based Prepaid with Drawdown

• Shareable fund pools - You can create account-level funds and allow eligible usage charges to draw from the same prepaid pool across subscriptions. If account hierarchy is enabled, child accounts can draw from a parent account's centralized fund pool.
• Drawdown priority - You can control consumption order by assigning a priority to the prepayment charge. The system consumes the lowest priority number first. If multiple eligible funds have the same priority, Zuora uses a first-expired-first-out tie breaker.
• Flexible validity periods - You can configure validity periods independently of billing periods. You can align a fund to the charge start, term start, term end, or a specific anchor date at subscription time.
  Note:

  During renewal, Zuora aligns prepayment charges and usage charges to the same start date. If the prepaid balance or validity period is configured to align to the charge start date, Zuora uses the first charge segment start date. If it is configured to align to the term start date or term end date, Zuora uses the final term dates for the renewed charge segment.

• Advanced proration - If a unit-based prepayment charge starts in the middle of a validity period, you can choose whether to prorate the funded units based on the overlap ratio or grant the full units for the partial period.
• Advanced rollover - You can control whether unused units roll over, how long rollover lasts, what end-date rule applies, whether rollover funds use a different priority, and whether rollover funds are consumed first or last.
• Account-level monitoring - You can monitor prepaid balances, expiring units, drawdown usage, and overage usage from the Account Details page and the Account Level Prepaid Consumption Dashboard.

Examples

Example 1: AI assistant credits sold by seat

A software company sells an AI assistant add-on to enterprise customers. The customer purchases 10 seats per month, and each seat grants 1,000 tokens. In the product catalog, the prepayment charge UOM is Seat, the default quantity is 10, the prepayment UOM is Token, and the prepayment units value is 1000. Zuora calculates a total prepaid balance of 10,000 tokens for that charge instance. The customer then uses a drawdown usage charge to consume tokens as end users interact with the AI assistant. If usage exceeds the available balance, the extra usage can be billed as overage.

Example 2: Shared credits across multiple subscriptions

A customer wants one centralized credit pool for several AI-enabled products under the same account. You can create a unit-based prepayment charge with account-level scope so eligible usage charges across subscriptions draw from the same fund. If the customer also wants unused units to carry into the next period, you can enable rollover and choose whether rollover funds are consumed before or after normal funds.

One-time prepayment charge behavior

The following table shows the behavior of one-time prepayment charges during subscription lifecycle changes:

Rollover best practices:

Configure the One Time Prepayment Charge Rollover = False, use the Prepaid with Drawdown REST API to trigger rollover manually.

If Rollover = Yes is configured for a one-time prepayment charge, a rollover fund is not created when the charge is invoiced. The unused balance remains on the original fund.

Discount best practices

You can apply a percentage discount to a prepayment charge, a drawdown usage charge, or both. When configuring the percentage discount charge in the product catalog:

• Set Apply Billing Period Partially to false.

• Do not set Discount level to Account.

For customers with OTR enabled:

• Set ReflectDiscountInNetAmount to true.

• Set ExcludeItemBillingFromRevenueAccounting to true.

• Set ExcludeItemBookingFromRevenueAccounting to true.

• Specify the application details explicitly.

• If the discount charge is taxable, do not set Tax mode to Inclusive.

The following discount configurations are not supported:

• Fixed-amount discounts applied to a prepayment charge or drawdown usage charge.

• Standalone discounts applied to a prepayment charge or drawdown usage charge.

Mediation support

Enhanced Unit-Based Prepaid with Drawdown works with Mediation only for non-pre-rated drawdown usage.

If a usage charge uses charge function Drawdown, do not pre-rate the usage with an amount in Mediation. Pre-rated usage with an amount cannot be used to draw down from a prepayment balance or billed as overage.

Recurring prepayment charge behavior

When you change a recurring prepayment charge, the fund end date is affected by an operation that shrinks the charge segment.

The following table describes how the Credit Option affects the charge amount and prepayment balance:

When you update the prepayment, Zuora first shortens the fund. Zuora then backs out the usage and redraws it when possible. Zuora always uses the first-in, first-out (FIFO) order for drawdown. Do not automatically redraw down usage after it crosses into overage.

Example: Update product

Assume that you create a prepaid charge with the following settings:

• Validity Period: Month
• Billing Period: Month
• Prepaid quantity: 100
• Price: $100 per month

The following table shows the Create/Add and Update Product use cases:

Example: Remove a prepayment charge after usage overage

1. Create a prepaid charge with Credit Option = Consumption Based, Validity Period = Billing Period = Month, prepaid quantity = 100, and price = $100.
2. Upload usage dated January 1, 2026, with quantity 10. Zuora draws down 10, and the fund balance is 90.
3. Upload usage dated January 25, 2026, with quantity 70. Zuora draws down 70, and the fund balance is 20.
4. Upload usage dated January 5, 2026, with quantity 45. Zuora draws down 20, the fund balance is 0, and the usage overage quantity is 25.
5. Remove the prepayment charge from the subscription with an effective date of January 20, 2026.

The following table shows the usage, drawdown, balance, overage, and amount to be billed before and after the prepayment charge is removed with an effective date of January 20, 2026: