Documentation Index
Fetch the complete documentation index at: https://docs.salesbricks.com/llms.txt
Use this file to discover all available pages before exploring further.
Overview
Duration discounts provide an alternative deal shaping approach to line item discounts. This method involves applying an upfront discount for a portion of the contract term.
These discounts are calculated based on the order’s total contract value (TCV) and apply to subscription-based (recurring) bricks.
Setup
1. Create an order and select a product, plan, and bricks.
2. Under the “Discounts and billing” section, click “Add/Edit discount.”
3. Use the “Discounts by month” section to add a duration discount to the order.
How duration discounts work
- Contract-level discounts: Duration discounts are applied to the TCV, rather than individual line items.
- Recurring bricks only: Duration discounts apply to recurring charges (plan and/or subscription-based bricks), but excludes non-recurring charges such as usage and bricks charged one-time upfront.
- One-time discounts: Duration discounts are one-time discounts, and do not carry over into subsequent agreements.
- Example 1: You close a 15-month initial contract with automatic renewal terms, and a 50% discount for the first 3 months.
This order would autorenew as another 15-month contract (having inherited the original contract length). However, the duration discount from the initial deal would not apply to the renewal.
- Example 2: You close a 7-month initial contract with automatic renewal terms, and a 100% discount for all 7 months.
This order would autorenew as another 7-month contract with no duration discount applied.
Discount (in dollars) = grand total of subscription bricks × (n ÷ total contract months) × (r ÷ 100)
- n = number of months the discount applies
- r = discount rate
- Grand total of subscription bricks: $1,000
- Total contract months: 12 months
- Number of discounted months (n): 6 months
- Discount rate (r): 10%
- Discount amount = $1,000 × (6 ÷ 12) × (10 ÷ 100) = $50
Use case 1
In this example, we apply duration discounts to a contract with a quarterly billing schedule.
Order details:
| |
|---|
| TCV | $1200 |
| Duration discount | 50% off the first 5 months |
Total duration discount
(Per month × rate × duration) | $250 |
Expected revenue
(TCV - discounts) | $950 |
| Grand total | Total months discounted | Total period discount | Expected bill |
|---|
| Q1 | $300 | 3 | $150 | $150 |
| Q2 | $300 | 2 | $100 | $200 |
| Q3 | $300 | 0 | 0 | $300 |
| Q4 | $300 | 0 | 0 | $300 |
| | | Total expected bill | $950 |
| | | Total discounted months | 5 |
| |
|---|
| TCV | $1200 |
| Discount per line item | 10% sales rate = $120 |
| Adjusted TCV | $1080 |
| Discount by duration | 50% off the adjusted TCV for the first 5 months = $225 |
| Expected revenue | $855 |
| Grand total
(after line item discounts) | Total months discounted | Total period discount | Expected bill |
|---|
| Q1 | $270 | 3 | $135 | $135 |
| Q2 | $270 | 2 | $90 | $180 |
| Q3 | $270 | 0 | 0 | $270 |
| Q4 | $270 | 0 | 0 | $270 |
| | | Total expected bill | $855 |
| | | Total discounted months | 5 |
Use case 2
If you upsell a deal with duration discounts before the end of the discounted period, the duration discounts would not apply to the co-termed upgrade, but will continue to apply to the base deal.
Initial order details:
| |
|---|
| Start date | Jan 1 2024 - Jan 1 2025 |
| TCV | $1200 |
| Discount by duration | 50% off the first 5 months = $250 or $50 per month |
| Expected revenue | $950 |
| |
|---|
| Start date | Feb 1 2024 - Jan 1 2025 |
| TCV | $1100 |
| Jan - March | Apr - June | Jul - Sep | Oct - Dec |
|---|
| Initial order | $150 | $200 | $300 | $300 |
| Upgrade order | $200
(prorated for Feb & March) | $300 | $300 | $300 |
| Combined expected bill | $350 | $500 | $600 | $600 |
