Investment budget calculations in a Pega Customer Decision Hub implementation for communications
In a PegaCustomer Decision Hub implementation for communications, products, such as handsets, can be sold at a loss or at a margin, and product costs can be either one-time or recurring. These calculations can be performed both while acquiring new customers and retaining existing customers.
The following attributes support this solution:
- MonthlyMargin
- OneTimeMargin
- MonthlyNegotiationCost
- OneTimeNegotiationCost
- MarginAmount
- NegotiationCost
All acquisition propositions are updated with these attributes upon importing from the product catalog.
The PricingCalculations strategy handles the flow in both negotiation and acquisition issues.
The following formulas calculate margin and loss:
OneTimeMargin= OneTimeBudgetedCost - OneTimeInternalCost
MonthlyMargin= MonthlyBudgetedCost - MonthlyInternalCost
OneTimeNegotiationCost= OneTimeInternalCost - OneTimeBudgetedCost
MonthlyNegotiationCost= MonthlyInternalCost - MonthlyBudgetedCost
MarginAmount= (CONTRACT_LENGTH* MonthlyMargin) + OneTimeMargin
NegotiationCost= (CONTRACT_LENGTH * MonthlyNegotiationCost) + OneTimeNegotiationCost
Use the following formulas for setting only one parameter, either margin or negotiation:
NegotiationCost= (NegotiationCost > 0) ? NegotiationCost: 0
MarginAmount= ( MarginAmount > 0 ) ? MarginAmount: 0
Financial terms
The following terms are key in investment budget calculations:
| Term | Definition |
|---|---|
| Monthly Recurring Cost (MRC) | The amount that the customer pays each month to benefit from a service. MRC is associated with newly acquired customers. |
| Monthly Internal Cost (MIC) | The cost at which the services are procured by the vendor. Margin occurs above this value and losses occur below this value. |
| Monthly Budgeted Cost (MBC) | The amount that the customer pays monthly in situations when a vendor wishes to retain that customer and it sells a plan at a discount. |
| Margin | The profit that the vendor makes by selling a service. Margin is calculated by subtracting the cost price from the selling price. |
| Negotiation Cost | The value that the vendor loses to retain a customer. In such scenarios, there is no margin. Negotiation cost is calculated by subtracting MBC from MIC. |
| Value to Customer | The difference between the price that the customer pays for a service and the advertised price of the service. Value to Customer is calculated by subtracting MBC from MRC and it is highest in scenarios where the vendor tries to retain a customer. |
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