Example of Calculation of Discount Amounts
This topic gives an example of how the application calculated the discount price for three products, based on:
Start Price. $100 list price for each product, defined by the pricing administrator.
Policy discounts. Contractual and market discounts that the pricing administrator defined. Contractual discounts are applied first.
Manual Discounts. Specified by the end user.
The data for the three products in the example is shown in the following table.
| Product 1 | Product 2 | Product 3 | |
|---|---|---|---|
Contractual Discount |
10% |
None |
10% |
Market Discount |
$10 off |
$5 off |
None |
Manual Discount Amount |
$10 |
None |
None |
Manual Discount % |
None |
10% |
None |
Manual Price Override |
None |
None |
$5 |
The prices calculated for the three products using this example data is shown in the following table. This table assumes that the pricing procedure has been set up to apply the contractual discount first and then the market discount. It also assumes that the user did not select the Override Policy Discount Field.
| Product | Start Price | Policy Discounts | Manual Discounts | Net Price | Price Calculation |
|---|---|---|---|---|---|
Product 1 |
$100 |
$20 ($10 Contractual + $10 Market) |
$10 entered in Manual Discount Amount field |
$70 |
$100 (Start Price) – 10% (Contractual) - $10 (Market) - $10 (Manual Discount Amount) |
Product 2 |
$100 |
$5 (Market) |
10% entered in Manual Discount % field |
$85.50 |
$100 (Start Price) - $5 (Market) – 10% (Manual Discount %) |
Product 3 |
$100 |
$10 (10% Contractual) |
$5 entered in Manual Price Override field |
$95 |
$95 (Manual Price Override, overrides start price and policy discounts.) |
If the end user selected the Override Policy Discount field, then the products would have the prices shown in the following table. In every case, the price calculation would just be based on the start price and manual discount and would ignore any application generated discounts such as Volume Discounts, Contractual Discounts, and so on.
| Product | Start Price | Manual Discounts | Policy Discounts | Net Price | Price Calculation |
|---|---|---|---|---|---|
Product 1 |
$100 |
$10 entered in Manual Discount Amount field |
0 |
$90 |
$100 (Start Price) – $10 (Manual Discount Amount) |
Product 2 |
$100 |
10% entered in Manual Discount % field |
0 |
$90 |
$100 (Start Price) – 10% (Manual Discount %) |
Product 3 |
$100 |
$5 entered in Manual Price Override field |
0 |
$95 |
$95 (Manual Price Override, overrides start price) |