Calculation Methods for Volume Rebates
The SuiteApp provides two calculation methods for calculating volume rebates on sales transactions. You can select Volume Amount or Volume Quantity.
Volume Amount
In volume amount, rebates are calculated on sales transactions based on the current tier achieved.
In a Marginal rebate scheme, the calculated volume rebate is based on the currently achieved tier.
When you add an item, NetSuite initially calculates the rebate based on the default tier. On a periodic basis, a process runs that evaluates the current tier achieved, assigns the appropriate tier, and recalculates the rebate based on the rate or value associated with this tier. For more information about tier achievement, see Tier Achievement with Volume Rebates.
Example #1
This uses Marginal rebate scheme then Rate per Unit as the rebate rate type.
|
Tier |
Minimum Tier |
Maximum Tier |
Rebate Value |
|---|---|---|---|
|
Tier 1 |
$1 |
$100 |
$5 |
|
Tier 2 |
$101 |
$350 |
$10 |
|
Tier 3 |
$351 |
$500 |
$15 |
Items A and B are both given a $5 default tier value multiplied by the item quantity. After the reconciliation process, the rebate values update to $10 and $7.5 respectively.
The amount of $200 for Item B qualifies into Tier 1 and Tier 2. The first $100 on that amount qualifies to Tier 1 with $5 rebate, then the remaining amount is for Tier 2 with $10 rebate.
After recalculation, the rebates are calculated this way:
(maximum tier 1/amount)* tier 1 rebate value + ((amount-maximum tier 1)/amount)* tier 1 rebate value
(100/200) * 5 + (100/200) * 10 = 7.5
|
Item |
Quantity |
Rate |
Amount |
Rebate (Before Reconciliation) |
Tier |
Rebate (After Reconciliation) |
|---|---|---|---|---|---|---|
|
Item A |
2 |
$30 |
$60 |
$10 |
Tier 1 |
$10 |
|
Item B |
1 |
$200 |
$200 |
$5 |
Tier 1, Tier 2 |
$7.5 |
Example #2
This transaction uses Marginal rebate scheme then Percentage as the rebate rate type.
Similar to the Rate per Unit calculation, a line item is given a default tier rebate. After tier achievement evaluation, rebates are recalculated as follows:
rebate tier value * amount
Item A: 0.05 * 60 = $3
Item B: 0.05 * 100 + 0.1*100 = $15
|
Tier |
Minimum Tier |
Maximum Tier |
Rebate Value |
|---|---|---|---|
|
Tier 1 |
$1 |
$100 |
5% |
|
Tier 2 |
$101 |
$350 |
10% |
|
Tier 3 |
$351 |
$500 |
15% |
|
Item |
Quantity |
Rate |
Amount |
Rebate (Before Reconciliation) |
Tier |
Rebate (After Reconciliation) |
|---|---|---|---|---|---|---|
|
Item A |
2 |
$30 |
$60 |
$3 |
Tier 1 |
$3 |
|
Item B |
1 |
$200 |
$200 |
$10 |
Tier 1, Tier 2 |
$15 |
Volume Quantity
In volume quantity, rebates are calculated on sales transactions in the achievement of target quantity tiers.
Unlike the Marginal rebate scheme where the total calculated rebates includes the sum of the rebates calculated at individual tiers, the Linear rebate scheme only looks at the highest tier achieved and calculates rebates based on that tier. As higher tiers are achieved, all related rebates are recalculated at the highest achieved tier.
Example #1
This transaction uses Linear rebate scheme and Rate per Unit as the rebate rate type.
The Aggregate box is checked in rebate agreements of Items A, B, and C.
|
Tier |
Minimum Tier |
Maximum Tier |
Rebate Value |
|---|---|---|---|
|
Tier 1 |
1 |
10 |
$2 |
|
Tier 2 |
11 |
20 |
$4 |
|
Tier 3 |
21 |
30 |
$6 |
Three units of Assembly Item A earns a $30 rebate, that is a $10 default tier rebate value multiplied by the item quantity.
|
Item |
Quantity |
Rate |
Amount |
Rebate (Before Reconciliation) |
Tier |
Rebate (After Reconciliation) |
|---|---|---|---|---|---|---|
|
Item A |
15 |
$100 |
$1,500 |
$30 |
Tier 3 |
$90 |
|
Item B |
10 |
$120 |
$1,200 |
$20 |
Tier 3 |
$60 |
|
Item C |
5 |
$150 |
$750 |
$10 |
Tier 3 |
$30 |
After the transaction is evaluated for tier achievement, the cumulative quantity for the transaction is equals to 30, which qualifies for Tier 3. The calculated rebates for the item using tier 3 rebate value is $6.
The $6 rebate value replaces the default tier value of $2, and is applied to each item after the recalculation process.
Example #2
This transaction uses Linear rebate scheme and Percentage rebate rate type. The agreement is also set to aggregate the item inclusion when calculating for rebates.
The default tier value is multiplied to the item rate, then multiplied to item quantity.
The rebates for the following example is calculated this way:
rebate tier value * rate * quantity
0.10 * $600 = $60
After the transaction is evaluated for tier achievement, the accumulated quantity for the transaction is equals to 6, which qualifies for Tier 2. The calculated rebates for the item using tier 2 rebate value is $180.
0.20 * $600 = $120
|
Tier |
Minimum Tier |
Maximum Tier |
Rebate Value |
|---|---|---|---|
|
Tier 1 |
1 |
5 |
10% |
|
Tier 2 |
6 |
10 |
20% |
|
Item |
Quantity |
Rate |
Amount |
Rebate (Before Reconciliation) |
Tier |
Rebate (After Reconciliation) |
|---|---|---|---|---|---|---|
|
Kit Item A |
3 |
$300 |
$900 |
$60 |
Tier 2 |
$120 |
|
Item A |
3 |
$300 |
$330 |
$64 |
Tier 2 |
$128 |
When you edit a line item in a transaction after the daily recalculation process, the rebate would be calculated based on the default tier. Then, after another recalculation process and tier re-assignment, the updated rebate tier values are reflected the next day.