POS Manual Discounts Part 4 – Manual Discount Interactions and Calculation Choices

ArcherPoint Retail Video

This is the fourth in a series of blogs designed to show how discounts are applied at the Point of Sale (POS), presented by Matt Street, Retail Product Lead at ArcherPoint.

In Part 1 of this series, Simple Manual Discounts at the Point of Sale, we showed the basics of how cashiers can give line and total discounts at the Point of Sale (POS).

Part 2, Adding Limits to Discounts Cashiers and Managers Can Offer at the POS, explained how to limit the amount of the discounts that cashiers can offer.

In Part 3, Capturing Reasons for Discretionary Discounts a Cashier Gives at the POS, we explored ways to capture the reason as to why the cashier gave the discretionary discount.

In this short video, Matt demonstrates how line and total discounts behave when they are used on the same order and shows different calculation choices that can be made. This demonstration also shows how to add the restriction that when line and total discounts are applied to same purchase, the system can be configured so that only the highest discount is applied to the order rather than applying both discounts to the purchase.

In Part 5, Matt will demonstrate several ways to customize the workflow of applying manual discounts while still maintaining consistency in how they are applied.

Check out all the blogs in the POS Manual Discount Series:

POS Manual Discounts Part 1 – Introduction to Simple Manual Discounts at the Point of Sale
POS Manual Discounts Part 2 – Adding Limits to Discounts a Cashier Can Give at the POS
POS Manual Discounts Part 3 – Capturing Reasons for Discretionary Discounts a Cashier Gives at the POS
POS Manual Discounts Part 4 - Discount Interactions and Calculations

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Below is a transcript of the video:

Hello and welcome to another edition of the ArcherPoint Retail Video Blog series.

This is part four of series of short blogs that address how discounts are applied at the point of sales.

In part one of the series, Simple Manual Discounts at the Point of Sale, we showed the basics of a cashier giving discretionary line and total discounts at the POS.

Part two, Adding Limits to Discounts, explained a few ways to limit discounts that a cashier can give.

And in part three, Reasons for Discretionary Discounts, we explored ways to capture a reason for why the cashier gave the discretionary discount.

In this blog, we will show how manual line and total discounts behave when they are used on the same order and show some calculation choices that can be made.

Adding to our user story from parts one, two, and three, we will add the requirement that if a manual line and total discounts are applied to the same purchase, then the higher of the two discounts will be used instead of the discounts being cumulative. Now let’s go through some examples of what happens when both lines and total discounts are specified in the same cart. We will start with two items and then apply a 10% line discount to line number one. As expected, we’ve discounted the $30.00 item by $3.00, for a net price of $27.00.

Now, let’s add a total discount to the whole order of 20%. As you can see, the system calculated the 20% total discount from the balance of each line versus the non-discounted total of $50.00. Looking at the math behind this, you can see that we have an original price of $30.00, with a $3.00 line discount, for a $27.00 price. And then we applied the 20% total discount, which was 20% of the remaining $27.00 for $5.40. We ended up with a final price for line one of $21.60.

Since we are only using percentages for our discounts, if we reverse the order of how we entered the discounts, we should end up with the same final price.

However, let’s look at the transaction detail that results after posting the transaction. We post our transaction, paying cash, and then take a look at our transaction register. This is the transaction that we just posted, and we’ll take a look at the discount entries. Notice that we now have a total discount of $6.00 and a line discount of $2.40 for the line. This is opposite of how we entered it. Remember, we did the line discount first and it showed $3.00, and then we did the total discount and it added $5.40 to it. The reason for this is a setting that is part of the retail set-up which is a global setting that determines how discounts are ordered. We said that a total discount here would be done before a line discount. So when we posted the transaction, it calculated the total discount first, and then went and calculated the line discount. If we look at the math of this reverse order, in other words, how the system calculated it when it was posted, we see our $30.00 original price at a $6.00 total discount of our 20% which leaves a balance of $24.00 on line one. We then, then, calculate the line discount of 10% so that it equals $2.40, for a net price of $21.60.

Now we’ll see what happens when we use our line discount amount and total discount amount buttons. We’ll start by giving this order a total discount amount of $10.00. And you can see that it calculated it. One thing to note is that it allocated the discount based on the price of each line. So it essentially give $6.00 of the $10.00 to line number one, and $4.00 of the $10.00 to line number two.

Now let’s apply our line discount amount of $3.00 to line number one, and we see that we get a discount percentage now of 28% with a final price of $21.60. If you remember, this is the same result that we got when we gave a 10% line discount to line number one and total discount of 20%. One thing that is important to understand about the line discount amount and total discount amount is that the calculation is based on a percentage that is calculated. So the percentage is calculated first, and then is applied to the line. And it follows the normal course of discount calculations. If we look at the math on this, the total discount of $10.00 was split over the two lines, essentially giving 20%. When we gave the line discount of $3.00, it calculated the percentage based on the retail price of $30.00. Then, it started with the $24.00 of line one from the result from the total discount. So the $24.00 yielded a discount amount of $2.40 and a final price of $21.60.

So far, we have seen the interaction of manual line and total discounts to be cumulative. In other words, applying the second of the two discounts adds a discount to the first. And it does so by calculating the second discount, based on the line amount that was calculated by the first discount.

Recall, however, in our user requirements we want to use the higher of the two, and for them not to be cumulative. To achieve this, we need to make a global setting of the behavior of the manual line and total discounts. And this can be accomplished on the Retail Setup Page. You can see that these two fields, Line Discount Manual Functions and Total Discount Manual Functions, are set to the sum setting, which explains why our discounts were adding together.

However, we want them to be the highest setting, and we also need to make sure the sequences are equal for this work.

Starting with the same transaction, we will now apply a line discount of 10% to line number one, and, as before, we got a $3.00 discount with an ending price of $27.00. We will now apply a total discount of 20%. Which is higher than the 10% discount. Notice how the discount is now changed and only the total discount is being used, since it is the higher discount and we have achieved a $10.00 total discount but have ignored the 10% line discount of $3.00.

Thanks for watching and stay tuned for part five of the Manual Discount series, where we will show some additional ways to customize the workflow of manual discounts, while at the same time providing consistency for how they are applied.

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