We are back with our series on Managing Your Subscription Products with Salesforce CPQ. Previously, we covered Renewals and how they are created. In case you missed it, here is the link to it.
This blog will explore Salesforce CPQ Amendments and how they are created for various use cases.
What are Amendments, and how are they created?
Amendments are created in Salesforce if there is a need to change subscription pricing and quantities for an existing active contract in Salesforce. Once the amendment is created, it determines the date from which the subsequent amendment might be applicable.
For example, your contract started in September 2022 and continues until August 2023. Your first amendment, let us say, is effective from October 22. It means your subsequent amendments can only apply after October 1.
Using the amend option, you can change pricing, add quantities, reduce them, or add new products to existing contracts. When you choose to amend the contract, it creates an amendment opportunity and a quote based on existing subscriptions that are tagged to the contract.
Any changes that have to be done will be done on the amendment quote lines, and they will reflect on the opportunity. Your amended quote lines will reference existing subscription lines from the original contract.
When the amendment opportunity is closed
When the amendment opportunity is closed, it will update the contract subscriptions by adding subsequent line items. If the existing subscription has been updated, it will create a new line item with a reference to the previous subscription reflecting the change as of the amendment date. Alternatively, it will create a new line without any reference in case a new product is added.
It is recommended that those subscription line items be co-terminated. It makes it easier to create renewals so that all lines renew simultaneously. In cases where it is not a use case and the subscriptions do not co-terminate, you can create more than one renewal and divide the lines on subsequent calls based on when they should start getting billed.
For many CPQ organizations, these contracts and subscriptions can either be tied to a Salesforce billing solution to generate invoices or integrated with another ERP solution.
For amended contracts, the amendment subscription’s final quantity is stacked based on all the line items referring to the original subscription, for example, in case of multiple amendments. They are reflected on a single combined line item at the time of renewal, and the price is reflected from the latest amendment line item subscription.
About Renewal Models
Similar to renewals, the behavior of your amendments is defined by their renewal model.
The two renewal models that we have are contract-based and asset-based.
Contract-Based Renewal Model
If it is contract-based, you already have a contract from the opportunity, and the customer wants to change it. You can click ‘Amend’ on the contract or ‘Amend Contract’ on the opportunity.
Salesforce CPQ will automatically create the amendment opportunity and have the products from your original quote. You can adjust these quantities; the amendment will reflect the quantity differences between your initial and the amended quote.
Asset-Based Renewal Model
For an asset-based renewal model, there are assets contracted on your opportunity or order, and the customer wants to change their quote. You will click ‘Amend Assets’ on the account or opportunity, and Salesforce CPQ automatically creates an amendment opportunity and a quote. It contains products from the original order, and you adjust these product quantities, and the amendment opportunity reflects the differences between your original and amended quotes.
Here is an example where we have added the complete enterprise package. It starts on April 1 and ends on On June 1, we added a premium product, quantity 10, and then we saw another package added from June 1 to the end of March.
In this case, the duration is less than the original contract, but an additional quantity ends on March 31, 2023. This means that at the end of March 31, 2023, all the lines for the entire renewal will be renewed.
CPQ simplifies renewals and amendments based on common use cases. For companies selling subscription or SaaS products, it may seem daunting. However, renewals and amendments can become simple and easy to understand once you see options with CPQ.
DemandBlue is a Salesforce CPQ specialist and tier-two billing partner that can help you augment your sales team needs for CPQ and beyond. So call us today to start your CPQ adventure.