Contract Pricing

Complete guide to pricing schedules, tiered pricing, and volume discounts in Purchase Contracts.

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Overview

CONTRACT PRICING STRUCTURE
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BASE RATE                    TIERED PRICING
─────────                    ──────────────

Standard Price               Price varies by quantity

Item: WIDGET-100             Item: WIDGET-100
Rate: $25.00/each            Qty 1-100:     $28.00
                             Qty 101-500:   $25.00
                             Qty 501-1000:  $23.00
                             Qty 1001+:     $20.00

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Base Rate Configuration

Setting Base Rate

BASE RATE SETUP
───────────────────────────────────────────────────────────

Contract Items Subtab:

┌────────────────────────────────────────────────────────┐
│ Item          Description        Quantity    Rate      │
│ ────          ───────────        ────────    ────      │
│ WIDGET-100    Widget Standard    1,000       $25.00    │
└────────────────────────────────────────────────────────┘

The Rate field is the BASE RATE:
  • Applies when no tiered pricing matches
  • Starting point for pricing
  • Can be overridden by tiered schedules

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Tiered Pricing Setup

Quantity-Based Pricing

TIERED PRICING CONFIGURATION
───────────────────────────────────────────────────────────

1. Click on item line in contract
2. Click "Pricing" or expand pricing section

Quantity Pricing Schedule:
┌────────────────────────────────────────────────────────┐
│ From Qty    To Qty      Rate                          │
│ ────────    ──────      ────                          │
│ 1           100         $28.00                        │
│ 101         500         $25.00                        │
│ 501         1,000       $23.00                        │
│ 1,001       (blank)     $20.00   ← No upper limit    │
└────────────────────────────────────────────────────────┘

How it works:
  Order 50 units  → $28.00/unit = $1,400
  Order 200 units → $25.00/unit = $5,000
  Order 800 units → $23.00/unit = $18,400

Calculation Methods

QUANTITY CALCULATION OPTIONS
───────────────────────────────────────────────────────────

Method 1: LINE QUANTITY
  Each PO line calculated independently
  
  Example PO:
    Line 1: WIDGET-100, Qty 50  → $28.00/unit (1-100 tier)
    Line 2: WIDGET-100, Qty 75  → $28.00/unit (1-100 tier)
                                   Both use tier 1

Method 2: TOTAL QUANTITY (Same Item)
  All lines of same item combined
  
  Example PO:
    Line 1: WIDGET-100, Qty 50  ─┬─ Total: 125 units
    Line 2: WIDGET-100, Qty 75  ─┘  → $25.00/unit (101-500 tier)
                                      Both use tier 2

Method 3: TOTAL QUANTITY (Same Parent)
  Items with same parent combined
  
  Use for: Variants (color, size) of same product

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Price Schedules

Vendor Price Schedules

VENDOR QUANTITY PRICING SCHEDULE
───────────────────────────────────────────────────────────

Setup: Lists > Accounting > Quantity Pricing Schedules

┌────────────────────────────────────────────────────────┐
│ Schedule Name:    Vendor Discount Schedule            │
│ Type:             Purchase                            │
│                                                        │
│ Calculation:      ○ By Line Quantity                  │
│                   ● By Item Quantity                  │
│                   ○ By Parent Quantity                │
│                                                        │
│ Tiers:                                                │
│   From     To        Discount Type    Value           │
│   1        100       Fixed Price      $28.00          │
│   101      500       Fixed Price      $25.00          │
│   501      1000      Percent Off      10%             │
│   1001     -         Percent Off      20%             │
└────────────────────────────────────────────────────────┘

Discount Types

Type	Description	Example
Fixed Price	Set price per unit	$25.00/unit
Percent Off	Discount from base rate	10% off $28 = $25.20
Amount Off	Flat discount per unit	$3.00 off per unit

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Volume Discounts

Total Contract Discount

VOLUME DISCOUNT EXAMPLE
───────────────────────────────────────────────────────────

Contract Terms:
  Max Amount: $100,000
  Volume Discount: 5% rebate if purchases exceed $75,000

How to Implement:
  Option 1: Track manually and apply credit
  Option 2: Use Vendor Rebate functionality
  Option 3: Custom field + workflow

Tracking:
  Contract PC-00125
  ├── Purchased to Date: $82,000
  ├── Threshold Met: ✓
  └── Rebate Due: $4,100 (5% of $82,000)

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Price Calculation Examples

Example 1: Simple Tiered

SCENARIO: Order 750 WIDGET-100
───────────────────────────────────────────────────────────

Tiered Schedule:
  Qty 1-100:     $28.00
  Qty 101-500:   $25.00
  Qty 501-1000:  $23.00

Order: 750 units

Calculation: 750 units × $23.00 = $17,250

All 750 units use the 501-1000 tier

Example 2: Multiple Lines

SCENARIO: Two lines, same item (By Item Quantity method)
───────────────────────────────────────────────────────────

PO Lines:
  Line 1: WIDGET-100, Qty 400
  Line 2: WIDGET-100, Qty 350

Combined Qty: 750 units → Tier: 501-1000 ($23.00)

Calculation:
  Line 1: 400 × $23.00 = $9,200
  Line 2: 350 × $23.00 = $8,050
  Total:  750 × $23.00 = $17,250

Example 3: Percent Off

SCENARIO: Percent-based tiers
───────────────────────────────────────────────────────────

Base Rate: $30.00

Tiered Schedule:
  Qty 1-100:     Base Rate (no discount)
  Qty 101-500:   10% off
  Qty 501+:      20% off

Order: 600 units

Calculation:
  Base: $30.00
  Discount: 20% off = $6.00
  Net Rate: $24.00
  
  Total: 600 × $24.00 = $14,400

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Price Override Behavior

When PO Price Differs

PRICE OVERRIDE HANDLING
───────────────────────────────────────────────────────────

Contract Price: $25.00
PO Entry Price: $27.00 (user entered different price)

Default Behavior:
  ⚠️ Warning displayed: "Rate differs from contract"
  
Options:
  1. Accept contract rate ($25.00)
  2. Override with entered rate ($27.00)
  
Override Settings:
  □ Allow price override on contracted items
  □ Require approval for price override

Override Controls

Setting	Behavior
No Override	Contract price always used
Allow with Warning	Warning displayed, user can override
Require Approval	Override triggers approval workflow

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Multi-Currency Pricing

Currency Handling

MULTI-CURRENCY CONTRACT PRICING
───────────────────────────────────────────────────────────

Contract Currency: EUR

Item Pricing (in EUR):
  WIDGET-100: €22.00/unit

When creating PO:
  PO Currency: EUR (must match contract)
  Rate: €22.00 (from contract)
  
  Exchange Rate applied at:
  • PO creation (for reporting)
  • Payment (for actual conversion)

[!NOTE] All items in a contract use the same currency. You cannot mix currencies within a single contract.

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Best Practices

Pricing Configuration

Practice	Recommendation
Tier breaks	Use logical quantity breaks
Base rate	Set to most common tier
Documentation	Note pricing logic in memo
Review	Verify rates before activation
Testing	Create test PO to verify pricing

Common Issues

Issue	Cause	Resolution
Wrong tier applied	Calculation method mismatch	Check schedule settings
Price not from contract	Contract not linked to PO	Select contract on PO
Override not allowed	Permission issue	Check role permissions
Tier not found	Quantity outside all ranges	Extend tier ranges

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Related Topics

• Contract Setup - Creating contracts
• Contract Fulfillment - PO creation
• Blanket Purchase Orders - BPO pricing