Effective Discount Calculation

It is possible to set up commission tables that give less commission as the discount gets higher on an order line. The appropriate commission rate is extracted using a calculated effective discount which is not necessarily the same as any discount assigned when the sales order was entered.

The comparison of the net selling price for the order line (no matter how it was assigned) versus a 'base' QB selling price is the effective discount for an order line. The formula for calculating the effective discount is:

Note: The calculation does not use QB1 from the master price list by default. If any other price break is applicable, then that QB price is used as the 'base' price in this calculation.

The value that is deemed the 'QB selling price' can be the current QB price in the master price list or it can be a 'reference price' which is a value stored in each order detail line. If prices have changed in the master price list in between order entry (when the selling price is assigned to the order) and invoicing (when commission is calculated), then that has an impact on the calculated effective discount which, in turn, has an impact on the commission rate that is extracted. You need to decide if you want to calculate effective discount by comparing the net selling price on the invoice to the QB price on file at the time of order entry (i.e. REFPRI) or to the current QB price in the master price list.

• A field in the open order file named 'REFPRI' is populated with the current Quantity break price as each detail line is entered. This preserves the QB price at the time the order was entered.
  • If parameters are defined in Maintain Discount Limits (OE04) that file is checked looking for a price for the product in any 'reference price list' assigned in OE04; this supersedes a QB price from the master price list and is written into the REFPRI field.
  • If the order detail line is subsequently recalled in OE30 and updated (for any reason), then the REFPRI field is refreshed with the current QB price. This is because the pricing routine gets called whenever an order detail one is updated in case the line is eligible for a new quantity break price.

• In Company Control Initialization (CC00/Order Entry), the 'Use Order Reference Price' flag controls whether the price stored in this field or the current QB Selling Price is used in the Effective Discount calculation:

  • When 'Use Order Reference Price' is selected in CC00/Order Entry, then the Effective Discount is calculated using the Reference Price compared to the net Price assigned on the Order.

  • When 'Use Order Reference Price' is not selected, the Effective Discount is calculated using the current QB Selling Price from the Master Price List compared to the net Price assigned on the Order.

  Note: If the QB Selling Price in the Master Price List has not changed between entering the Order and Invoicing the Order, then the resulting Effective Discount is the same whether 'User Order Reference Price' is selected or not selected. However, if the Master Selling Price has changed between Order entry and Invoicing, then the Effective Discount calculation will be different depending on how this flag is set. For example:

  Master Price List: 1 = $10.00
  Selling Price assigned on the Order = $9.00 (override or special price)
  Stored Price (REFPRI) = $10.00

  Master Price changes to $11.00
  Order is Invoiced.

  If 'Use Order Reference Price' is selected, Effective Discount = 10%
  [(10.00 - 9.00) / 10.00] x 100

  If 'Use Order Reference Price' is not selected, Effective Discount = 18.18%
  [(11.00 - 9.00) / 11.00] x 100

Exclude Ticketing and Miscellaneous Charges

If the 'Exclude Ticketing and Misc.' check box is selected in SA02, the Effective Discount calculation must be modified. The new Effective Discount Calculation is:

Here's an example:

QB1 Selling Price = $10.00
Ticketing & Misc. Cost = $0.25
Selling Price on Invoice = $9.00

The Effective Discount is calculated as follows:

[10.00 - (9.00 - 0.25) / 10.00] x 100 = 12.5%