> ## 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. # Duration Discounts ## 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. duration-discounts ## 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. ## Formula #### **Discount (in dollars) = grand total of subscription bricks × (*n* ÷ total contract months) × (*r* ÷ 100)** * *n* = number of months the discount applies * *r* = discount rate **Example calculation:** * **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 | **Invoices:** | | 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** | Alternatively, you may also apply a combination of discount durations and line item discounts to an order, such as in this example: **Order details:** | | | | -------------------------- | ------------------------------------------------------- | | **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 | **Invoices:** | | 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 | **Upgrade order details:** | | | | -------------- | ----------------------- | | **Start date** | Feb 1 2024 - Jan 1 2025 | | **TCV** | \$1100 | **Invoices:** | | 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 |