Service Contract adjustment once price change occurs after contract is activated

Oracle Service Contracts - Version 11.5.6 to 11.5.10.2

Below are the options to adjust the service contract once a price change occurs on an Active Contract: 

OPTION 1: Terminate Sublines and Create New Sublines With the New Price

The contract subline has a unit and extended price. You wish to change the unit price for future billing periods without affecting the pricing for prior periods.

For this discussion, let us assume that the line has already been billed for one or more periods and that the coverage level is Covered Product.

To adjust the price for the subline perform the following actions:

1. Set the profile OKS: Default Pricing Date to 'Sub line start date'. This will assure that the pricing for the subline picks up the correct price.

2. Verify that you have multiple entries for the designated service program on your price list. The original price should be end dated and the new price, with the appropriate effective dates, should be entered.

3. Open the contract for update.

4. Terminate the original subline on the desired date.

5. Create a second subline for the same covered product. The effective start date for this subline will be one day after the end of the original subline.
The end date should be the end date for original subline.

6. Confirm that the new pricing is used. You do not need to enter a new billing stream, but you will have to refresh the schedule before running Check QA.

7. Run Check QA to reactivate the contract.

OPTION 2: Use the Cascade Service Price to adjust the amount for the unbilled periods.

This option has been tested in release 11.5.10. This is an easier method for completing the desired action, but the unit price at each line does not reflect the true price for the full duration of the contract.

For this scenario, assume that a contract is billed monthly for a period of 2 years. The contract line has three sublines, one for $240 and two lines for $480.

Through the first year of the contract, invoices have been generated for $50 per period, $10 for the first subline and $20 each for the other two sublines.

The Billing Schedule for the line has 24 entries, each with an amount of $50.

At the end of the first year, the service price is doubled. The desire is to bill the remaining periods at $100 per period. This objective can be achieved by taking these actions

Using the Service Contracts Manager:

1. Open the contract. The contract does not have to be opened for update.
2. Position the cursor on the contract line.
3. Select Actions from the toolbar; select Cascade Service Price.
4. The Current Price is $1,200 (24 @ $50). Enter a new price of $1,800. Add the price increase for the remaining period of the contract to the Current Price.
5. Press the Apply button.
6. Press the Billing button for the service line. The entries in the schedule that have already been billed remain unchanged. In this example, the first 12 periods will have the value $50. The remaining entries are adjusted to incorporate the price change. In this case, the remaining entries in the schedule are changed from $50 to $100, resulting in a total amount of $1,800.

OPTION 3: Override the amount at the subline level.

With this scenario, the amount for one subline is changed without changing the other contract lines / sublines.

For this example, assume that invoices have already been generated for 12 of 24 periods.

This scenario was tested in release 11.5.10.

Set the profile OKS: Use Advanced Pricing for Manual Adjustment to 'No'.

Using the Service Contracts Manager:
1. Open the contract for update.
2. Position the cursor on the contract subline.
3. Change the value in the Subtotal field. Add the total increase in price for the remaining period of the contract to the current value.
4. Save the change.
5. Press the Apply button.
6. Press the Billing button for the service line. The entries in the schedule that have already been billed remain unchanged. The remaining entries are adjusted to incorporate the price change.

Ref: Metalink NoteID: ID 204084.1