Pricing & Discounts

Price Lists and Quantity Breaks

A price list is a set of prices that applies in a context — a currency, a class of customer, a period. Items on it can have quantity breaks.

Where to find it

Architect Panel → ERP - Trading & Analytics:

• Pricing — the console — resolve a price, see which rules applied
• Price Lists — the lists and their scope
• Price Rules — discounts applied after the list price

What scopes a list

• Entity — which legal company it belongs to.
• Currency — a list is priced in one currency.
• Customer class — trade, retail, distributor, and so on.
• Valid from and to — the period it applies for.
• Priority — which list wins when more than one could apply.
• Tax inclusive — whether the prices already include tax.

Set the tax-inclusive flag deliberately

It is one field and it changes every number. A retail list quoted inclusive and a trade list quoted exclusive are both normal; a list flagged wrongly produces prices out by the tax rate on every line, and the error is uniform enough to look like a pricing decision rather than a mistake.

Price lists per currency, not converted

Hold a euro list rather than converting a sterling list at today's rate. Converted prices move with the exchange rate, which means a customer's price changes daily and quoted prices cannot be honoured. A separate list is a commercial decision made once.

Quantity breaks

Each item line carries a minimum quantity, so several lines for the same item form a break structure: one from 1, one from 10, one from 100. The line with the highest minimum the order quantity satisfies is used.

A line can hold a price or a discount percentage, so a break can be expressed either as an absolute price or as a reduction from the base.

Watch the boundaries

Breaks should be strictly increasing and gap-free from 1. A structure starting at 5 leaves quantities of 1 to 4 without a price on that list, which either falls through to another list or fails — neither of which is what was intended.

Check the break points make commercial sense too: if 9 units cost more than 10, customers will notice, and it is not a good look.

Units of measure

Lines carry a unit of measure. Where you sell in more than one, price each explicitly rather than relying on conversion, so a price per case is a decision rather than a division.

Worked example

A wholesaler runs a trade list in sterling and a separate euro list. A fast-moving line is priced £4.80 from 1, £4.35 from 24 and £3.95 from 240. An order for 30 takes the £4.35 break. When a promotional euro price is agreed, only the euro list changes and no exchange rate is involved.

Recommendations

• Check the tax-inclusive flag on every list you create.
• Separate list per currency, never a conversion.
• Start breaks at 1 and leave no gaps.
• Use validity dates for seasonal pricing rather than editing prices back and forth.

Discount Rules and Stacking

The list gives a starting price. Rules adjust it — a promotion, a contract discount, a settlement incentive.

Where to find it

Architect Panel → ERP - Trading & Analytics:

• Price Rules — the rules, their priority and stacking
• Pricing — the console — resolve a price and see what applied

What a rule holds

• Scope and criteria — what it applies to.
• Action and value — a percentage off, an amount off, or an override price.
• Priority — the order rules are considered in.
• Stackable — whether other rules may apply after it.
• Valid from and to — the promotional window.
• Budget cap — the most this rule may give away in total.
• Hit count — how many times it has actually fired.

Stacking is explicit

This is the field that matters most. A non-stackable rule stops further rules applying, which is how you express "10% off, and that is instead of the contract discount, not on top of it".

Stacking left to chance is how a customer receives three discounts intended as alternatives and pays less than cost. Decide it per rule, deliberately, and check it in the pricing console before the rule goes live.

Order of application

Rules apply by priority. With percentages this is not commutative — 10% then 5% is not 5% then 10% off the same base — so the order is a commercial decision. Put the discount you would defend first, and set the rest to non-stackable if they are meant as alternatives.

Budget caps

A cap is the total a rule may give away before it stops applying. Use it on promotions: it converts an open-ended commitment into a known maximum, and it is the difference between a campaign that overperforms profitably and one that overperforms expensively.

Hit counts tell you the truth

The hit count is the most useful diagnostic here. A rule with zero hits is not working — usually its criteria are wrong or a higher-priority non-stackable rule is short-circuiting it. A rule with far more hits than expected is catching more than intended.

Check hit counts a week after a promotion launches, not at the end. That is when it can still be fixed.

Always test in the console

The Pricing console resolves a price and shows what applied. Test a representative order before enabling a rule for real, including one that should not qualify — the negative case is where criteria errors show up.

Expire rather than delete

Let a finished promotion lapse on its end date. A deleted rule takes its hit count and its history with it, and next year you will want to know how the same promotion performed.

Worked example

A retailer runs a 15% seasonal promotion, non-stackable, priority 100, capped at £20,000, valid for six weeks. Contract discounts sit at priority 50, stackable. The promotion therefore replaces the contract discount rather than adding to it, and when £20,000 has been given away it stops. Hit counts after week one confirm it is firing on the intended lines.

Recommendations

• Set stackable explicitly on every rule. Never leave it to the default.
• Cap every promotion.
• Test a qualifying and a non-qualifying order before going live.
• Review hit counts a week in.

Commission Schemes

A commission scheme says who gets paid, for what, how much, and where the cost is recognised.

Where to find it

Architect Panel → ERP - Trading & Analytics:

• Commission Schemes — payee, basis, criteria, rate, tiers and accrual account

Architect Panel → ERP - Finance:

• Chart of Accounts — the accrual account the cost posts to

What a scheme holds

• Payee — the person or team earning it.
• Basis — what the calculation runs on: revenue, margin, or another measure.
• Criteria — which transactions qualify.
• Rate — a flat percentage.
• Tiers — bands, where the rate changes with volume.
• Accrual account — where the cost is recognised.

Basis: revenue or margin

This is the single most consequential choice. Commission on revenue rewards volume, and a salesperson maximising it will discount to win business — rationally, because the discount costs them nothing.

Commission on margin aligns the incentive with the outcome the business actually wants. It requires cost data to be right, which is a good reason to get cost rates and stock costing correct first.

Tiers

Tiers are held as explicit bands rather than a formula, so an accelerator — 3% to target, 5% above it — is stated rather than encoded. That means somebody can read the scheme and see what it does, which matters because commission disputes are usually about interpretation rather than arithmetic.

Be explicit about whether a higher tier applies to all sales or only the excess above the threshold. Both are used; only one is what you agreed; and the difference is large.

The accrual account

Commission is a cost of the period the sale was made in, not the period it is paid in. Naming the accrual account puts the charge in the right month.

Without it, commission appears when it is paid, so a strong December followed by a January payout makes December look better than it was and January worse. Match the accrual account to whatever your accountants use.

Keep schemes simple

A scheme nobody can calculate in their head does not motivate — it produces monthly queries instead. If explaining it takes more than a couple of sentences, it will be argued about.

Change schemes at period boundaries

Mid-period changes raise the question of which deals fall under which scheme, and that question has no good answer. Set the new scheme running from a period start.

Clawbacks

Decide up front what happens when an invoice is credited or a customer does not pay. It is far easier to agree while nobody is affected than after somebody has been paid on a sale that unwound.

Worked example

A distributor pays on margin: 3% up to £40,000 of margin per quarter, 5% on the excess only, stated explicitly in the tiers. Criteria exclude intercompany sales. The accrual posts to Sales Commissions, so each month's accounts carry the commission earned in that month rather than paid in it.

Recommendations

• Commission on margin wherever your cost data supports it.
• State whether tiers are marginal or total.
• Always set the accrual account.
• Change schemes at period boundaries, and agree clawbacks in advance.