Customer discounts

Transactor Desktop offers several ways to offer and apply discounts to your customers. This topic will describe the main ones. This topic contains personal views from the Transactor support team however we'd recommend discussing pricing and discounting policy with your accountant.

There are three main methods to use:

  • Line discount
  • Early payment discount
  • Personalised 'special' price list

 The pros and cons of these methods are listed below.


Line discount 

A common form of making prices variable for each customer, using one of the existing price bands as a base point. This is sometimes called the Order Discount. The discount % is inherited onto each new order, from the customer record's Discount % setting. To change the customer's 'default' line discount, with a customer selected on the Main Form, choose Customer menu > Edit. 

To override this discount % on a single order, with the order on the Main Form in edit mode, from the Job menu, choose Pricing / Discount. To override the product's line discount eligibility, tick/un-tick the 'Allow Discount' box when selecting the product onto a line item row.

Pros:

  • Selective discount by product. Some products may be eligible, some not. Products that are eligible for the discount are highlighted with an asterisk in the price column.
  • Discount is apparent, affecting the live price and hence invoice amount. The discount amount given is shown at the bottom of the Main Form and the invoice.
  • Each customer can have their own default line discount % as set in the customer record.


Early payment discount

This is a neat way of rewarding customers who remit payment within your terms. They don't actually get the discount credited to their account until after you receive payment. The amount they stand to save by remitting the statement amount due early is clearly printed on some of the statement reports. Transactor Desktop statements  (Report menu > Customer > Statement Monthly or Statement ) compose this personalised message by looking at each customer record's 'Early Payment Discount %' value..

The default early payment % for each Customer Type (eg. Dentist) is settable in the Control Centre ( Advanced > Customer Types).

Pros:

  • Selective discount by customer or customer type.
  • Potential discount amount is made very clear on the customer statement and what date the remittance is required by, to earn it.
  • Good incentive for customers to pay promptly each and every month
  • The discount amount actually credited for each previous statement will be clearly listed on the next statement.

Cons:

  • A little extra admin, each time a remittance is entered into Transactor Desktop, a corresponding credit needs adding for the value stated on the customer's last statement.

Considerations

If you are using the Summary Invoice Monthly, for sending one bill per month, you can still make use of the Early Payment Discount mechanism. Print your usual Summary Invoice, but also attach a copy of the normal Statement monthly as a guide (and remittance slip) for the customer. The two documents complement each other.


Personalised 'special' price list

Use as a last resort. Why? Well, having too many price lists (aka price bands) is confusing for your staff and your customers. Mistakes cannot be spotted easily and there will be a lot more administration overhead. A company having more than a handful of price bands should perhaps re-assess it's business practices.

Of course, unless you have quality/grade information encoded in your product codes, having a basic price band for each of your quality grades is recommended eg. NHS, INDEPENDENT, PRIVATE. However these bands are global and not targeted at any particular customer.

Before we discuss what to do if 'special' prices are asked for, check you are familiar with the different product coding methods. Product codes which carry quality/grade information,  and product codes one per product and used in conjunction with separate price bands. See Product Coding and Price Bands

If your sales team come back to you stating 'we've got to do something to gain / retain this customer who's saying he doesn't want to pay more than £ x.xx for Product Y for grade Z:  don't respond by creating yet another price band to satisfy these one or two customers. Tesco doesn't respond to individual customer requests by printing separate price lists for obvious reasons, and nor should a smaller business

What to do instead

Offer the customer a line discount off one of your existing price lists, or better still, a higher Early Payment Discount (EPD %).  If you can't satisfy the customer by bringing a specific product's price down enough from one of your existing price lists, then there are other ways to deal with it.

One way is this swings and roundabouts approach: estimate the quantity sales for the following quarter for that customer of that product. Derive from that an approximate 'difference amount' between what you'll be charging (using your standard list) and what the customer wants to pay. Use the 'difference amount' to work out what percentage you'd have to apply to the whole bill to more than cover this.  Explain to the customer that you'll offer them an extra generous EPD % (or Line Discount) off their monthly bill providing your payment terms are met. The potential savings for the customer are greater than their expectations. It's an offer too good to refuse, therefore you have a win-win situation. You are deriving prices from one of your standard price lists, and (in the case of using the EPD % as the carrot) you have an excellent mechanism to incentivise your customers to consistently pay within your terms.

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