Set Up Subscription Products in Salesforce CPQ

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A subscription product is a product that has some recurring payment element to it, whether it be a monthly payment (think your Netflix subscription), or an annual subscription (think an Amazon Prime subscription).

Tracking which customers have subscription-based products is one of the major highlights of Salesforce CPQ, and is worth considering for any organization with recurring renewal opportunities. Continue reading to learn how you can set up subscriptions in Salesforce CPQ, and the benefits of doing so.

What is a Subscription Product?

As I mentioned, a subscription product is a product that has some recurring payment element to it, whether it be a monthly payment, or an annual subscription.

If you want to think more about it in terms of hardware, software, and support – hardware would be your one time purchasable product, software, could either be one time with a license key or a subscription (Office365), and then support, which is almost always a subscription.

In other words, a subscription is any product that you can cancel based on the frequency of the subscription.

Note: for the sake of this article, I am not going to get into the difference between billing and subscription, let’s just assume that they are the same.

Setup Subscriptions in Salesforce CPQ

When setting up Products in Salesforce CPQ there are certain fields that are important to setting up Subscription products and ensuring that they behave as you would expect them to.

  1. Subscription Pricing: without this field being set to something, your product will not be treated as a Subscription.
  2. Subscription Term: this is the length of time associated with the product, so if its an annual product you would set it to 12 months.
  3. Subscription Type: this field defines what kind of Subscription product it is.

Subscription Type

  1. Renewable = Subscription
  2. One-Time = acts like a Subscription, but doesn’t renew
  3. Evergreen or Renewable/Evergreen (check out this article to understand this option further)

Imagine you have the following setup on a Product:

In words, this setup would be:

This is a Subscription product that is Renewable and it renews on an annual basis. It’s pricing is fixed, meaning it goes based on a stated list price and not based on another product.

Benefits of Subscription Products

1. Automatically Created and Related

There are numerous benefits of using subscription products in Salesforce, the most important of all is that when Subscription products are used, they will be automatically created and related during the creation of the Renewal Opportunity and Renewal Quote. When used correctly, this allows companies to easily predict or forecast how much and of what products they will be selling in the future.

2. Discount Schedules

Another benefit of using Subscription Products in CPQ, is the expanded options for discounting. In addition to allowing users to apply the usual manual additional discounts, with Subscriptions, you have the ability to layer on Discount Schedules. There are two different types of Discount Schedules, Term and Volume. These Schedules usually apply to the list price (see more about the pricing waterfall to learn more). When applied to Term, it means that a discount based on the length of time the product is sold for will be applied, and similarly, for Volume, it is based on the quantity purchased that a discount will be applied. These two things can be applied together as well giving you a lot of power over the pricing model of the Subscription products.

3. Subscription Products to Ramp Up Over Time

Lastly, at least for the purpose of this article, Salesforce also gives the ability to set up Subscription products to ramp up over time. To ramp up simply means that either the quantity or the price is going up or down over a series of time within a single quote. An example would be if you wanted someone to buy your product over the next three years, with each year costing a little less. With MDQ (multi-dimensional quoting) and Subscription products combined, this is possible.

Summary

Salesforce CPQ has a lot to offer to anyone who is looking to complete the lead to cash flow from within Salesforce. The ability to set up Subscription products with a series of toggles is a great reason to look into CPQ if the standard products and pricebooks are not cutting it.

This is something I didn’t cover in my previous article explaining the differences between CPQ with standard Salesforce Products and Pricebooks.

If you want to learn more about Salesforce CPQ in general check out the SalesforceBen Salesforce CPQ Certification Guide.

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