Demand-based billing is one of the billing models that are prevalent in the solar energy industry and also in utility charges. But the interesting fact is that demand-based billing has gotten an uprise in SaaS billing. The companies that use a recurring billing model or a subscription-based model for their business have also started to incorporate demand-based billing in one of their billing models.
Demand-based billing is dependent on the demand of the user or consumer. Sometimes the demand of the users is more and that creates the peak factor of the pricing according to the demands. If we look from the perspective of solar companies, the charges or billing is done depending on the consumption of the power.
We can presume that demand charges are calculated based on the highest 15-minute average usage recorded on the demand meter during the month. If your facility uses a lot of power in short bursts, demand charges will make up a larger portion of your bill. Demand charges are generally a smaller portion of your bill if you use power at a more consistent rate throughout the month.
Understanding Peak Demand in Demand-based Billing
Peak demand is a core term for demand-based billing that encompasses the time when there is the highest level of consumption required for energy. Peak demand is further categorized into three more categories that are explained below.
Time of use demand
Time of use demand is the type of demand billing in which at one point in time there is the most usage and peak factor of the usage of power. On peaks and off peaks are categorized depending upon the usage and time. Some companies have on peak factor in the daytime and an off-peak factor at night time. The time of use demand can be further calculated using the meter for certain days. For an instance, some companies might be having high demand on some days and might not be on some days.
Seasonal demand is when there is a peak factor for an overall time in certain seasons of time. It could be any season. For example, some companies might have higher energy demand during summer and others in winter. For solar companies, the energy consumption and demand for energy in kWh might vary and the changes will be according to their demand and the type.
How does demand charges are affected by solar?
When it comes to consumption charges, the impact of solar is relatively straightforward: by producing electricity from a solar installation, a commercial customer can reduce the energy they must buy from the utility, thereby lowering utility bills.
Unfortunately, solar does not provide consistent cost savings when it comes to demand charges. Because solar energy production varies according to weather and time of day, periods of high solar energy will not always coincide with periods of high-power demand in a building.
As a result, solar customers cannot rely on their systems to reduce demand charges. A chance rainstorm during the month when the facility uses the most energy results in a demand charge equal to what it would have been before installing solar.
Regardless, it is critical to understand this component of the customer’s bill in order to determine how much of the customer’s costs solar can offset.
Demand-based billing Management with Subscription Management Platform
The subscription management platform provides features and solutions for demand-based billing. With the subscription management platform, price skimming is one of the main features in which the prices are skimmed for the peak factors and off-peak factors.
Another feature that the subscription management platform provides for demand-based billing is that you can understand the price discrimination in SaaS billing and charge the customers by keeping the ebbs and flows or fluctuations of the change pricing according to the demand of the consumer. Through the feature of price discrimination, you will be able to identify the fluctuating demand in the market. Find the other inducing factors like increased supply cost, regional location, size of the market, etc. Segment and charge customers based on their demands across the identified sections.
When the demand is higher, there is room for yield management. Leverage the prospects for your airlines, train, buses, restaurants, hotels, and other businesses secreted within scarcity and urgency. Your customer knows the availability wanes, make them pay more for their needs and requirements. When the demand is high, the charges can be made accordingly as in we see the flights. With the subscription management platform, you can automate demand-based billing and charge the customers accordingly.
The subscription management platform such as SubscriptionFlow can help you in geo-based pricing that entails the change and fluctuations in pricing according to the location. Aim for higher growth and seek opportunities everywhere. Take your business beyond the borders. Attract customers who contribute more to your revenue streaming based on their currency value and geographical location with SubscriptionFlow.
Take the Action!
If you are looking for a subscription management platform that can manage demand-based billing for you, then head over to SubscriptionFlow and schedule a demo with them, now!