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Documentation > MAC-PAC Reference Library > Distribution > Order Processing > Key Concepts and Procedures > Discounting Methods > Types of Discounts

Types of Discounts


You can define five types of discounts:

·      Contract

·      Customer

·      Volume

·      Header

·      Line

Volume, header, and line discounts are each associated with a specific currency and effectivity dates.  Customer discounts are used to ensure a specific discount percent is deducted for each order entered for a specific customer.  Contract discounts are used to ensure that orders with certain part, product class, and customer combinations receive a specific discount percent.  Contract discounts deduct a percent from the selling price; they do not modify the base price.

You can also establish price breaks—which can be used as another method of discounting.  This technique modifies the selling base price rather than deducting an amount or percentage.

Contractual Discounts

Contracts allow you to establish a percentage off the selling price to be applied to all orders under the contract.  The selling price may either come from a price list, if a default price list exists, or from the Warehouse Balance file.  Contracts can be established at three levels—a corporate, a bill-to customer, or a bill-to/ship-to combination.  Contract discounts are maintained in Customer/Contract Price Maintenance conversation.  They are applied at the order line level.  Using contractual discounts will give you a price code of '9'.

Customer Discounts

Customer discounts give a percentage discount to orders placed from a specific customer.  The customer discount percent defaults to zero each time a customer is added; however, this percentage may be overridden in the Customer Master Maintenance conversation on the Billing Information screen.  Customer discounts can only be applied if the customer class for the customer allows discounts, as defined in Reference File category 310, Customer Class Defaults.  Customer discounts are applied at the order line level.  While pricing a sales or quote order, the customer discount is first retrieved from the ship-to customer.  If the percentage retrieved is not greater than zero, then the customer discount is retrieved from the bill-to customer.

Volume Discounts

Volume discounts are order level discounts.  They are maintained in the Discount Maintenance conversation.  They define a percentage that is discounted from every order line based on the quantity ordered.  Volume discounts can be set up for ranges which consider the quantity ordered.  The totals from every open line on the order are summed to determine which quantity range will be used.

Volume discounts are based one of four things:  total units sold, total sales amount, total weight for the sale, or total volume for the sale.  The volume discount calculation basis is defined on Reference File category G87 - Volume Discount Basis.  If the volume discount is based on weight, quantity, or volume, the discount percent is applied to orders when they meet the quantity breaks required to qualify for this discount.  If the volume discount is based on sales, the discount percent is applied to orders when they meet the sales amount required to qualify for this discount.

While pricing a sales or quote order, volume discount codes can either be automatically retrieved or entered directly onto the order header.  The system will first search for a default volume code defined for the customer.  It will first attempt to retrieve a discount code from the ship-to customer.  If the default volume discount code for the ship-to customer is blank, the system will try to retrieve a volume discount from the bill-to customer.  If a default volume discount does not exist for either the ship-to or bill-to customers, the volume discount code can be defaulted using template processing.  If a volume discount is not automatically retrieved by any of the methods mentioned above, you may enter one manually.

Header Discounts

Header discounts are order level discounts.  They are maintained in the Discount Maintenance conversation.  They establish a fixed discount percent that is deducted from each order line, regardless of the order quantity.  Up to five header discounts can be added for one order.  Header discounts cannot be defaulted; they must be manually entered on the order header.  Any valid header discount or discount template code may be entered.

Line Discounts

Line discounts are maintained in the Discount Maintenance conversation and are applied to order lines, regardless of the order quantity.  Line discounts are different from the other discount types in that they are dynamically applied.  They are defined as either a fixed percent or amount which is linked to a set of user-defined customer and part pricing/discount fields.  If the characteristics of an order header and line match the values of the user-defined pricing/discounting key fields, the line discount will be applied.  Line discounts can also be attached to template codes.  In this case, the order's characteristics must match the values of the template's key fields in order to be applied.

Note:    Line discounts cannot be manually entered.  They must default to the order line based on the values of the user-defined fields or template key fields.

To maximize flexibility, you can establish multiple target sets for one line discount.  This is done by creating multiple variations for the values of the discounts' user-defined pricing/discount fields where each set of field values is associated with a different version of the discount.  Creating multiple versions of the same discount allows you to capture specific order characteristics and therefore exercise a very high-level of control when determining which combination of conditions will trigger which specific discount.  The user-defined pricing/discount fields are maintained on the Part Master and Customer Address files.

Price Break Discounts

Price breaks allow you to reduce the base price for items based on the ordered quantity.  There are two kinds of price break discounts:  warehouse balance price breaks and price list price breaks.  Price breaks used with the warehouse balance pricing method are defined in the Warehouse Balance file Maintenance conversation.  They establish replacement prices for ranges of order quantities related to a specific item.

In addition, price breaks can be established for price lists in the Price List Maintenance conversation.  These price breaks can be defined as a percentage off the base price or a new base price for each of the quantity breaks.

Note:    Since using price breaks is a method for redefining the base price, it is not tracked as an actual discount on the order screens.