This example demonstrates how an account level fixed-amount discount charge is allocated on the four regular charges that belong to the two subscriptions of the same customer account. You can see the following analysis in this example:

• The discount applying sequence
• The discount amount allocation
• The charge-level MRR calculation
• The subscription-level MRR calculation

Example1: Suppose a new customer account (as the subscription owner) has two subscription.

• Subscription 1 is a half year termed subscription with a rate plan containing two regular charges triggered on 1/1/2019.
  • Charge 1 (R1) is a regular monthly charge of $300/month.
  • Charge 2 (O1) is a regular one-time charge of a $100 flat fee.
• Subscription 2 has the same product rate plan (containing R2 and O2), but the effective term is from 1/16/2019 to 7/1/2019.
• An account-level discount charge of $1500/quarter is added to Subscription 1 for the first quarter.

The discounting logic and the MRR calculation for this example can be illustrated by the diagram below:

The discount applying sequence:

To apply an account-level discount, the regular charges in all the subscriptions of the target subscription owner account is sorted to the following sequence. See Sequence of applying a fixed-amount discount charge to multiple regular charges .

• R1
• R2
• O1
• O2

The discount amount allocation:

When applying a discount to a regular recurring charge, the discount must be evenly distributed and applied as a monthly recurring charge:

• When applying a discount on R1, the $1500/q recurring quarterly discount charge is viewed as a $500/m monthly recurring discount charge. The price of R1 in the charge period from 1/1 to 4/1 is $300/m, so at maximum, a recurring discount charge of $300/m can be applied to R1. The discount balance as a recurring monthly charge is $200/m (500-300) for the charge period from 1/1 to 4/1.
• The discount charge is then applied as a 200/m recurring discount charge on R2. As the price of R2 in the charge period from 1/16 to 4/1 is $300/m, the discount balance as a recurring charge is 0 in the charge period from 1/16 to 4/1 and $200/m in the charge period from 1/1 to 1/16.

To apply a discount to a one-time charge, the discount is applied as a total amount for the discount charge's effective time range.

• To apply the discount on O1, the discount balance as a total amount for the quarterly discount charge is 200 - 200*16/31=$96.744. As the price of O1 is $100, after the discount is applied to O1, the discount balance is 0.
• As no discount balance is available from 1/1 to 4/1, no discount can be applied to O2.

The charge-level MRR calculation:

The Gross MRR, Discount, and Net MRR of each charge or charge period are calculated as in the table below. O1 and O2 are one-time charges and are not counted in the MRR calculation.

The subscription-level MRR calculation:

By adding up the MRR of the charge segments or charge periods with the same start and end dates, the MRR of Subscription 1 and Subscription 2 is as shown in the table below: