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Investment budget calculations in a Pega Customer Decision Hub implementation for communications

Suggest edit Updated on September 10, 2021

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

CONTRACT_LENGTH is a control parameter that is set to 24 by default.

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:

TermDefinition
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.
MarginThe profit that the vendor makes by selling a service. Margin is calculated by subtracting the cost price from the selling price.
Negotiation CostThe 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 CustomerThe 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.
Note: In version 8.6, the capabilities of the Pega Customer Decision Hub™ for Communications application (earlier Pega Marketing™ for Communications) are merged with Pega Customer Decision Hub. You can implement Pega Customer Decision Hub for communications by adding components. For more information, see Communications and financial services applications merged with Pega Customer Decision Hub.

Starting in version 8.5, Pega Customer Decision Hub is Pega's main solution for one-to-one customer engagement, combining the features available in previous versions of Pega Marketing™ and Pega Customer Decision Hub with many new features. Pega Marketing is no longer available as a separate product.

Tags

Pega Customer Decision Hub 8.6 - 8.7 Pega Customer Decision Hub for Communications 8.5 Pega Marketing for Communications 7.4 - 8.4 System Architect Data Integration Media and Advertising
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