Mechanisms determine how rebates should be earned for a trading program’s program lines.
When a user creates a program line, they must select a mechanism for rebate to be calculated.
A percentage may be earned once a certain target transaction (e.g. trading partner spend) value is reached, or a fixed amount of rebate may be earned once transactions have increased from the previous year. Each of these options is available as a mechanism.
The two fundamental conditions for choosing a mechanism are:
- Knowing when rebate is earned.
- Knowing how rebate is calculated.
Options for when rebate is earned are:
- Guaranteed: Rebate will always be earned (independent of transacted value).
- Target transactions: Rebate will be earned when transaction targets (value) have been reached, e.g. trading partner spend surpasses $1,000,000.
- Target volume: Rebate will be earned when transaction targets (volume) have been reached, e.g. trading partner spend surpasses 10,000 units.
- Growth: Rebate will be earned when certain growth thresholds are met, e.g. trading partner spend is at least 10% more than last year.
Options for how rebate is calculated are:
- Fixed: Rebate amount earned is a fixed amount, e.g. $5000.
- Percentage: Rebate amount earned is a percentage of the transactions that applies to the program line, e.g. 5%.
- Per unit rate: Rebate amount earned is a ‘per unit’ rate for the volume of units of the transactions that applies to the program line, e.g. $1 per unit.
Tip: Once your team has chosen when rebate is earned and how it is calculated, use the table below to identify which mechanism to select when creating a program line.
Lump sum and apportioned
The lump sum and apportioned variations of the fixed amount or externally calculated mechanisms above determine whether the rebate earnings are just applied to the program line, or if they should be apportioned (spread equally) among the relevant transactions so that they display in the granular reporting.
An externally calculated program line means that the value of rebate earning is calculated outside of Enable, and can be updated at any point if necessary.
Tip: Refer to the table below for more details on when to use these options.
Fixed percentage of price
The fixed percentage of price mechanism uses the Pricing app to determine the amount of rebate earned for a program line.
It does this by taking each transaction line relevant to the program line, finding the active price for that product from the price list, and applying the configured percentage to it. If no price exists, then the earnings for this transaction line will be zero.
Targeted % with ratio targets
The targeted % with ratio targets mechanism is used where the earnings are a percentage of transactions, but the size of this percentage depends on the ratio of specified groupings of transactions.
For example, a program line earns a 1% rate on the spend if 25% of all purchases are of a particular product group, 2% if 50% of all purchases are of that product group and 3% if 75% of all purchases are of that product group.
What’s next?
Learn more about setting up a program line here.
Alternatively, click the links below to learn more about each mechanism:
- Externally calculated - apportioned
- Externally calculated - lump sum
- Fixed amount - apportioned
- Fixed amount - lump sum
- Fixed percentage rate
- Fixed unit rate
- Targeted amount with monetary targets
- Targeted percentage rate with monetary targets
- Targeted unit rate with monetary targets
- Targeted amount with targets in units
- Targeted percentage rate with targets in units
- Targeted unit rate with targets in units
- Targeted amount with growth targets
- Targeted percentage rate with growth targets
- Targeted unit rate with growth targets
- Fixed percentage of price
- Targeted percentage rate with ratio targets