Discounts are percentages associated with quantities or customers or designated plans that reduce the stock base price of an inventory item. Discounts can occur anywhere in the distribution channel, modifying either the manufacturer’s list price set by manufacturer, retail price by retailer or the list price to the potential buyer.

Purpose:

The purpose includes increasing short-term sales, moving out-of-date stock, rewarding valuable customers, encouraging distribution channel members to perform a function, benefit the discount issuer and the sales promotions finally.

Discount Types:

There are four discount types in Order Management module of Dynamics SL

  • Trade Discounts
  • Discount Price Plans
  • Chain Discounts
  • Whole Order Discounts

Trade Discount – Trade discounts are given to increase the volume of sales being made by the supplier. Trade Discount is a basic customer discount that will always be applied to items ordered by the customer. The Trade Discount is the default discount and may be overridden if other discounts are applied to the order. This can be set up in Trade Discount % in Customer Maintenance of AR

 

Example:

Creating an Order against the Customer C300 defaults the discount % as V15 in the sales lines thereby reducing the sales price of the line item from $10000 to $8500.

 

Discount Price Plans – Discount Price Plans are traditional quantity type discounts associated with a particular category, such as Customer, Inventory Item, Inventory Price Class, Customer Price Class, or a combination of these. Discount Price Plans are set up in Sales Price screen of OM module.

Discount Price Plans are applied to the sales order according to the following logic.

 

1. Allow Discount Pricing indicates that pricing plans set up in Sales Price can be applied to orders when the plan parameters are met.

2. Is Allow Discount Pricing selected, Discount Price Plans will be applied to the order. If not, the sales price will be the stock base price for the inventory item.

3. If discount pricing is allowed, the Discount Price Plans are queried according to the category sequence set up in Discount Sequence.

Example:

Inventory Item is first on the list and Customer is second on the list. Allow Discount Pricing is selected. There is a 10% discount for the inventory item and a 20% discount for the customer. Since Inventory Item is first in the discount sequence, the 10% discount will be applied if the inventory item entered on the order matches the inventory item designated in the discount plan.

Chain Discounts – Chain Discounts are tiered discounts where multiple discounts are applied. Chain Discounts must be enabled in OM Setup and are entered in Disc % at a line item level on the sales order. Discount ID is entered followed by the discount per cent, for example A10, and each tier in the chain is separated by a forward slash (A01/V5/F2)

Chain Discounts are activated by checking Enable Chain Discounts and entering the Default Discount ID

 

The first discount in the chain is applied to the original item price; the second discount in the chain is applied to the original item price minus the first discount, and so forth.

Example:

Assume the original item price is $100 and a three-tier Chain Discount is being applied in the following order: 10%, 5%, and 2%. The calculation is as follows:

  • 10% is deducted from original item price $100, making the price $90
  • 5% is deducted from original item price minus the 10% discount ($90), making the price $85.50.
  • 2% is deducted from original item price minus the previous discounts ($85.50), making the price $83.79. The discounted price for the item is $83.79.

 

Whole Order Discounts – Whole Order Discounts are discounts that are applied to the total merchandise amount and are in addition to any other line item discounts that may have been applied. Whole Order Discounts can be enabled by selecting Allow Total Order Discounts on the Discount Pricing tab of OM Setup.

 

Whole Order Discounts are entered in Whole Order Discount Pct on the Totals tab of Sales Orders and Shippers.

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