Creating Components

Components allow you to introduce additional “line items” to your Products that are often expressed as “add-ons”, upsold features, or pay-per-use items.

To date, over 100,000 components have been created in Chargify. If you bill for add ons and/or have a complex pricing model, Components are most likely your solution.

Three types of Components

  • Metered: used to bill for any type of unit that resets to 0 at the end of the billing period (think daily Google Awords clicks or monthly cell phone minutes). This is most commonly associated with Usage Based Billing, billing for overages, and much more.

  • Quantity Based: used to bill for the number of some unit (think monthly Software User Licenses or the number of pairs of socks in a box-a-month club). This is most commonly associated with billing for user licenses, number of users, number of employees, etc.

  • On/Off: used for any flat fee, recurring add on (think $99/month for tech support or a flat add on shipping fee).

Which Pricing Scheme do I use?

The following information will help you determine which Pricing Scheme is correct for your Component.

  • Per Unit: Charge the same amount per unit
  • Tiered: Charge a different per unit price
  • Volume: Charge a different per unit price, but the price per unit for all units is determined by the prevailing price based on the allocated quantity
  • Stairstep: Charge based on a range

Let’s look at some examples:

  • Per Unit: Simple enough. Enter a cost per unit and you’re done. The cost per unit can go up to 4 decimal points.

  • Tiered, Volume, and Stairstep (When your pricing varies per unit)

Tiered: Total Cost is $96.

In order to create a Tiered, Volume, or Stairstep pricing scheme, you must define brackets. To illustrate all three of these robust pricing schemes, let’s imagine a customer, John Smith, purchases 11 units priced according to the image below. Let’s breakdown what the total cost will be for each type of these three pricing schemes, so you can understand which scheme is best suited for your component(s).

  • 5 units at $10 each plus…
  • 5 units at $8 each plus…
  • 1 unit at $6
  • Each additional unit is $6 each (A “blank” Ending Quantity represents “Infinity” or strictly translated, “All units 11 and above are $6 each.”)

Volume - Total Cost is $66

  • 11 units at $6 each (the prevailing price is the total price for each unit)
  • Each additional unit is $6 each. (A “blank” Ending Quantity represents “Infinity” or strictly translated, “All units 11 and above are $6 each.”)

Stairstep - Total Cost is $24

  • 5 units at $10 plus…
  • 5 units at $8 plus…
  • 1 unit at $6
  • Each additional unit is free (A “blank” Ending Quantity represents “Infinity” or strictly translated, “All units 11 and above are $0 each because the total cost of this “step” is $6.”)

Metered vs. Quantity Based

The difference between the two is that a Metered Component will reset to 0 at the end of the Billing Period and a Quantity Based Component will not. This Billing Period is defined at the Product level. So for example, if you have a Product that bills every 3 months, any Component you attach to that Product will bill every 3 months as well.

How do I apply proration on my components?

Proration and it’s full affects on subscriptions is covered in full detail here.

You can prorate the cost of components that are added during a billing period, and Chargify will calculate the proration down to the second. For example, a SaaS company may sell user licenses at $10/each, and if a license is added exactly half way through the month, they can charge a prorated cost of $5.

  • Go to the Settings Tab
  • Click “Components”
  • Choose your default component proration. Reference the “At Time of Change” and “At End of Period” to determine what each type of proration means. These prorations apply to quantity and on/off components. (They do not apply to metered components).

Creating a Metered Component

A Metered Component is used to bill for any type of unit or usage that resets to 0 at the end of the billing period.

Common Examples

  • Bill for Daily Google Adwords Clicks
  • Bill in arrears for Monthly Cell Phone Minutes
  • Bill for any type of Usage
  • Bill for Overages

See more examples of Metered Billing here.

How to Create a Metered Component

  1. Go to the Setup Tab
  2. Click “Create New Component”
  3. Click “Metered Component”
  4. Enter your Component’s Name
  5. Enter the Unit Name: this should be in singular form.
  6. Enter a Description (optional)
  7. Select your Pricing Scheme & define your product. If you already know, continue to Step 8.
  8. Tax: Is your Component taxed? If yes, check this box.
  9. Fractional Quantities: Do your unit values have decimal values? (eg: You bill based on “number of hours” and may need to bill for “4.5 hours”). If yes, check this box.
  10. Display on Public Signup Pages: Do you want to allow your customers to enter their number of desired units on the Public Hosted Payment Pages? If yes, check the box next to each applicable Product.

Creating a Quantity Based Component

A Quantity Based Component is used to bill based on the quantity of a given unit.

Common Examples

  • Bill for the number of User Licenses
  • Bill for the number of (fill in the blank)

See more examples of Quantity Based billing here.

How to Create a Quantity Based Component

  1. Go to the Setup Tab
  2. Click “Create New Component”
  3. Click “Quantity Based Component”
  4. Enter your Component’s Name
  5. Enter the Unit Name - this should be in singular form.
  6. Enter a Description (optional)
  7. Select your Pricing Scheme & define your product. If you already know, continue to Step 8.
  8. Tax: Is your Component taxed? If yes, check this box.
  9. User Access: Do you want your customer’s to have the ability to update this Component’s quantity in the Billing Portal? (eg: allowing a customer to add or remove User Licenses). If yes, check this box.
  10. Fractional Quantities: Do your unit values have decimal values? (eg: You bill based on “number of hours” and may need to bill for “4.5 hours”). If yes, check this box.
  11. Display on Public Signup Pages: Do you want to allow your customers to enter their number of desired units on the Public Hosted Payment Pages? If yes, check the box next to each applicable Product.
  12. Save your changes
  13. Make your component prorated (optional)

Creating On/Off Component

An On/Off Component is used to bill for flat priced, recurring add-ons.

Common Examples

  • Adding $5/mo for Shipping
  • Adding $100/mo for Tech Support

How to Create a Quantity Based Component

  1. Go to the Setup Tab
  2. Click “Create New Component”
  3. Click “On/Off Component”
  4. Enter your Component’s Name
  5. Enter a Description (optional)
  6. Enter your Per Unit Price
  7. User Access: Do you want your customer’s to turn this Component On or Off in the Billing Portal? If yes, check this box.
  8. Tax: Is your Component taxed? If yes, check this box.
  9. Display on Public Signup Pages: Do you want to allow your customers to add this Component to their order on the Public Hosted Payment Pages? If yes, check the box next to each applicable Product.
  10. Save your changes
  11. Make your component prorated (optional)