‘Targeted amount with growth targets’ deal mechanism

Description

A mechanism where the earnings are a fixed amount, but the size of this amount depends on the level of turnover growth achieved.

For this plug-in, growth relative to baseline can be expressed as a number of units, as an amount of money, as a percentage that is calculated using turnover units, or as a percentage that is calculated using turnover value.

Example

A deal for which the earnings are £10,000 if turnover growth is less than £500,000, £20,000 if turnover growth is greater than or equal to £500,000 but less than £750,000, or £30,000 if turnover growth is greater than or equal to £750,000.

Configuration approach

You will be required to:

• Select a growth target type, from a choice of Value, Units, % by value or % by units;

• Configure one or more turnover bands, with a turnover target and an earnings amount for each (where the turnover target reflects the user’s selection for growth target type and the earnings amount is always a monetary amount, in the currency of the parent scheme), as illustrated below for a GBP scheme and a deal where the growth target type is % by value:

• Select one or more items for each dimension that has been configured for you as included items for the deal.

• Enter baseline figures for turnover value and turnover units.

DealTrack will select matching turnover lines for the deal, based on:

• The supplier to which the deal belongs.

• Your dimension item selections.

• The start and end date of the deal.

• The currency of the parent scheme.

To calculate an earnings result for the deal as a whole, DealTrack will use whichever of the following is appropriate given the growth target type you have selected to determine which turnover band, and therefore which earnings amount, applies:

• The difference between the total for turnover value across the matching turnover lines and your entry for turnover value if the growth target type selection is Value.

• The difference between the total for turnover units across the matching turnover lines and your entry for turnover units if the growth target type selection is Units.

• The ratio of the total for turnover value across the matching turnover lines to your entry for turnover value if the growth target type selection is % by value.

• The ratio of the total for turnover units across the matching turnover lines to your entry for turnover units if the growth target type selection is % by units.

To calculate an earnings result for each matching turnover line, DealTrack will use:

• The entries for turnover value from the matching turnover lines to apportion the deal level result for earnings and derive an earnings result for each of the matching turnover lines if the growth target type is Value or % by value.

• The entries for turnover units from the matching turnover lines to apportion the deal level result for earnings and derive an earnings result for each of the matching turnover lines if the growth target type is Units or % by units.

Optional settings

Which configuration options are available in the ‘Mechanism details’ area of the deal configuration page depends on which option you select for the growth target type setting.

If the growth target type is Value or % by value, you will be able (but not required) to use the ‘Mechanism details’ area of the deal configuration page to:

• Enter a value in the Discount % box.

• Select one or more deals as deduction deals.

If the growth target type is Units or % by units, no optional settings will be available in the ‘Mechanism details’ area of the deal configuration page.

Discount %

For a deal that uses the Targeted amount with growth targets plug-in, the discount percentage is set to null by default to indicate that there is no (i.e. zero%) discount percentage.

You will have the option of taking no action to accept the default null value for Discount % or typing a numeric value (to a maximum of 3 decimal places) to specify a discount percentage.

Please note — you should enter the percentage value, e.g. 2.5 as opposed to 0.025 for a 2.5% discount.

The expected scenario is one where a user enters a positive percentage (e.g. 2.5) to reduce the qualifying turnover, although the user may enter a negative percentage to inflate the relevant turnover. You will not be allowed to enter a percentage that is greater than 100% or less than -100%.

When a non-zero value is entered into the Discount % box a Discount deducted from setting will become visible.

For a deal that uses the ‘Targeted amount with growth targets’ plug-in:

• The Discount deducted from entry will be set to (and fixed as) Target turnover.

• DealTrack will use turnover that is net of the discount percentage to determine which turnover band applies.

Deductions

When using the Targeted amount with growth targets plug-in, no deals will be selected for the Deductions setting by default.

You will have the option of taking no action to accept this default selection or selecting from a list of the deals that have been configured for the parent scheme.

If you accept the default option, DealTrack will calculate both turnover and earnings for the ‘deduct from’ deal in the normal way without referring to the earnings from any other deals.

To calculate the earnings for a deal that uses the Targeted amount with growth targets plug-in where one or more deals have been selected for the Deductions setting, DealTrack will:

• Sum the total deal earnings across the selected deduction deals to derive a grand total for deducted earnings.

• Calculate the total for turnover value across the included turnover lines for the ‘deduct from’ deal and subtracts the grand total for deducted earnings from this total to derive an adjusted turnover total for the deal.

• Compare the adjusted total for turnover value with your entry for baseline value and the turnover targets that have been configured for the deal to determine which turnover band, and therefore which earnings amount, applies to the ‘deduct from’ deal.

• Use the entries for turnover value from the included turnover lines for the ‘deduct from’ deal to apportion the deal level result for earnings and derive an earnings result for each of these turnover lines.

For a deal where one or more deals have been selected for the Deductions setting and a non-zero discount percentage has been entered, the discount percentage is applied first. That is, the relevant percentage discounts are applied before the earnings from the deductions deal(s) are subtracted.