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Selecting a support mechanism for a new SPA

The support mechanism on a special pricing agreement (SPA) determines which calculation formula and how much support a manufacturer will pay out or a distributor will receive.

This article will guide you through:

  1. How to select a support mechanism on a new SPA
  2. Margin maintenance
  3. Fixed amount per unit
  4. Percent of price list
  5. Price difference

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How to select a support mechanism for a new SPA

The support mechanism is the first field in the Distributor terms section in the Terms tab of a SPA.

The additional fields displayed in the Distributor terms section will depend on the support mechanism selected. Where a field is mandatory, this is indicated by an asterisk * next to the field name, e.g. Support mechanism*.

See the support mechanism options to select from below. None should be selected if the support mechanism is to be selected later.

Distributor terms section

Margin maintenance

Allows the distributor to maintain a specific profit margin relative to the discounted price to the end customer. So the profit margin is defined, and then the support owed is calculated to ensure that the margin is met. Calculated using:

Support = Units * ((PriceListPrice - SupportedPrice) + SupportedPrice * Margin)

Fixed amount per unit

A simple support mechanism specifies the exact amount of support to be paid per unit sold. Calculated using:

Support = Fixed amount * Units

Percent of price list

Using this mechanism, the support is calculated based on a percentage of a product’s price as specified on a price list. Calculated using:

Support = PriceListPrice * SupportedPercent * Units

Price difference

Support is calculated by finding the associated list price in two price lists and taking the difference. Calculated using:

Support = PriceListPrice1 - PriceListPrice2

Only items in both PriceListPrice1 and PriceListPrice2 will be selectable on SPAs using this support mechanism.

What’s next?

Once you have selected a support mechanism, navigate to the relevant mechanism’s distributor terms below:

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