You sell the same product at one price to a dealer, another to retail, and yet another to a key account. Volume discounts are added on top of this.
This structure is easy to keep track of with a few customers. With a hundred customers and a thousand products, it becomes impossible to remember; every order turns into a calculation task.
In this article, we explained how to set up the price list and discount matrix, the order of priority, and authorization control.
Table of Contents
The difference between price lists and discounts
A price list holds the selling price of a product valid for a specific customer group, such as a dealer list or retail list.
A discount, on the other hand, is a reduction made over the list price. It can depend on volume, campaigns, or customer-specific agreements.
The two structures work together: first, it is determined which list the price will be pulled from, and then the discounts are applied.
Maintaining this distinction is important. Instead of creating a separate list for each customer, using a common list and customer-based discounts keeps the structure manageable.
Setting up price lists
The number of lists should be small. In practice, three to five lists are sufficient for most businesses: retail, dealer, key account, export.
Each list must have a validity date. When a price hike is made, the old list closes and the new one goes live; past documents retain the price from their own period.
Bulk update support is critical. Changing the prices of a thousand products one by one is a full day's work; we explained the method in the price list management article.
Foreign currency lists must be kept separate. Calculating the TRY equivalent every time makes it difficult to manage currency risk.
How does a discount matrix work?
A matrix defines a discount rate at the intersection of two or more dimensions. The most common dimensions are customer group and product group.
For example, a rule is established such that "Group A dealers receive a ten percent discount on product category X." There is no need to define individual products and customers.
Quantity breaks can also be added. Applying additional discounts on orders above a certain quantity is an incentive that increases order size.
Customer grouping is the foundation of this structure; B2B account groups we covered segmentation in the article.
Priority order: which rule wins?
More than one rule may apply to a single order. Customer group discounts, campaign discounts, and volume discounts might coincide.
What happens in this case must be predefined. Are discounts added, multiplied, or does only the highest one apply?
The common practice is for the most specific rule to win. A customer-specific agreement overrides the group discount.
If the rule is ambiguous, the salesperson and the customer calculate different figures; this turns into a trust issue during the quotation phase. Price quotation preparation you can check the article.
Manual discount and authorization
Defined discounts do not cover every situation. Additional discounts may be necessary at the negotiation table; this must also be possible in the system.
However, not without limits. Allowing every salesperson to offer discounts at will makes margins uncontrollable.
The correct setup is a role-based discount ceiling. The representative is free up to a certain rate; approvals are required above it. Authorization establishes this boundary.
Manual discounts must also be reported. A team constantly pushing the ceiling indicates that the price list is unrealistic; sales reports see the article.
Keeping the structure simple
Price structures become complex over time. When a new rule is added for every special case, after a while, no one can explain how the price is formed.
It is useful to perform cleaning once a year. Unused rules are closed, and similar rules are consolidated.
The simplicity test is straightforward: can a newly hired sales representative understand how the price is formed in ten minutes?
Price and discount definitions are kept in the general definitions module; sales, B2B, and e-commerce channels read the same definitions.
How is price increase day managed?
Price updates require careful handling, even in a well-established structure. A poorly timed price hike creates confusion in open orders.
The first decision is which price open orders will be shipped at. The common practice is to protect the price at the time of the order; this policy must be communicated to the customer in advance.
The second decision concerns the status of sent offers. Offers within their validity period must be honored; expired ones are revised to the new price.
The third issue is channel synchronization. The new price must reflect on marketplaces and the dealer portal simultaneously; delays create price discrepancies between channels and generate customer complaints.
We covered the bulk update method in the price list management article, and label synchronization on the store side in the campaign and price change article.
The impact of discounts on margin
Discount rates are usually discussed in terms of turnover; however, their impact on margin is much greater. A small discount on a low-margin product can wipe out a significant portion of profit.
Therefore, discount authorization limits should vary by product group. It is a more accurate setup to allow a wider operating range for high-margin items and a narrower one for low-margin items.
Applied discounts must also be reported regularly. If the average discount rate is rising between periods, either competition has increased or the list prices are unrealistic.
The distribution of customer-based discounts is also instructive. If certain customers receive additional discounts on every order, this actually indicates that their segment is wrong; you can refer to the customer-based pricing article.
These analyses are extracted from sales reports; margin visibility must be restricted by authorization. Report authorizations article covers this topic.
Frequently asked questions
How is a campaign price managed?
With a time-limited price list or discount rule. An end date must be defined; campaign management see the article.
Can the e-commerce price be different?
Yes, channel-based lists can be defined; multi-channel sales management you can check the article.
Are past orders affected by price increases?
No. Documents carry the price of their own period; a policy must be determined for open orders.
Line-based discount or total discount?
Line-based is preferred; document matching and reconciliation become easier this way.
A well-established pricing structure frees salespeople from calculations and allows them to focus on the customer. A poorly established structure generates disputes on every order.
By consulting the EQLEM team you can set up your price list and discount matrix.