This article will walk you through the different pricing and support mechanisms you can use within special pricing agreements to calculate the final price to the end customer and the amount of support to be claimed back. Every contract will have a specific support mechanism defined. It is also possible to specify the end customer pricing using a customer pricing contract; learn more here, which utilizes pricing mechanisms. This article will describe:
The purpose of pricing mechanisms is to specify how the supported price to the end customer is calculated on a customer pricing contract. There are two mechanisms available to use in agreements:
The purpose of support mechanisms is to define how the distributor is compensated in eligible SPA transactions.
Support calculations are triggered based on the following actions: a SPA being approved, transaction imports, price list changes, and updating the dimension collection attribute values for products. Whenever new transactions are uploaded into Enable, each transaction line is cross-referenced with the library of SPAs to determine if it qualifies for support under a SPA, whether via an agreement reference or based on eligibility criteria.
A simple support mechanism specifies the exact amount of support to be paid per unit sold. Here is the formula and an example of how the support is calculated:
Support = Fixed amount * Units
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.
Support = Units * (PriceListPrice - (SupportedPrice * (1 - Margin)))
Using this mechanism, the support is calculated based on a percentage of a product’s price as specified on a price list.
Support = PriceListPrice * SupportedDiscount * Units
By taking the difference between two price lists support can be calculated.
Support = PriceListPrice1 - PriceListPrice2
Both PriceListPrice1 and PriceListPrice2 are set on the DSC; learn more here.