Retail discounts

This article provides an overview of the discount functionality in Dynamics 365 Commerce. It explains the properties found on the various discount forms, and best practices for discount management. However, this article doesn't cover the various discount types in detail, such as simple, quantity, mix and match, and threshold discounts. Separate articles cover these details.

Because retailers require flexible discounting, and discount styles and types vary by industry, there are many ways to define discounts in Commerce. The discounting functionality was added on top of the existing discount functionality in the core product (Supply Chain Management), resulting in some duplication of functionality. As a result, you can configure the discount types for five different entities: customer, loyalty program, channel, catalog, and affiliations. Because of the number of discounting options, it's especially important that you plan and document your discounting strategy.

Create discounts

Each discount type has a dedicated page that you use to create and manage the discount. Commerce also has an All discounts page and a Pricing and discounts management workspace, both of which you can use to create a new discount of any type.

Discount headers and discount lines

All discounts have a header and one or more lines. All discount types have properties defined on the header, and some discount types have additional properties defined per line. For example, quantity discounts have quantity tiers. People often think about discounts in Commerce only in terms of the discount header and assume that all the lines on the discount are related to each other because they share a discount header. However, this view of discounts is too simplistic. For simple discounts and quantity discounts, it's more accurate to think of each discount line as an independent discount that shares some properties with the other discount lines. In fact, the pricing engine evaluates simple and quantity discounts in just this manner. Each discount line for simple discounts and quantity discounts is independent. For simple discounts, it's easy to understand that each discount line is independent of all other discount lines on the same discount, because there isn't a quantity or amount criterion that's required to qualify for the discount. For quantity discounts, you might think that the lines can be combined to reach the quantity criterion for a discount, but they don't. The quantity tiers must be reached independently for each line of a quantity discount. If your pricing strategy requires a quantity discount to apply when multiple sales lines combined reach the quantity criterion, Microsoft recommends that you group those items into a supplementary category and then configure that category as the quantity discount line.

When you create discounts, always avoid or minimize overlapping discount lines. Overlapping discount lines occur when two or more discount lines in the same discount can be applied to the same product. In this case, the pricing engine treats the discount as two or more independent discounts that it evaluates against each other to find the best discount amount. In addition, it can be difficult for a user to know what the discount is by looking at the discount definition.

Manage discounts

Settings and options that are common to all discounts

This section describes the properties that are common to all types of discounts.

When you manage discounts, it's important that you understand each discount option individually, but it's equally important that you understand which options affect each other and how. The common settings for discounts fall into two categories. In the first category, settings filter discounts for consideration. Examples include Status, Currency, and Unit of measure. Settings in the second category control the order in which multiple discounts are considered and applied. Examples include Discount concurrency mode and Pricing priority. The following image shows the various properties of a discount.

Discount ID

The field labeled Discount holds a unique ID for each discount that you set when you first create a discount. You can't change the discount ID later. In Commerce parameters, you can set up independent number sequences for each type of discount. In this case, ensure that the number sequences don't collide. For example, you can use a unique prefix for each discount type. For example, D for discount, Q for quantity, MM for mix and match, and T for threshold.

Discount name

You can use a short free text field to describe the discount. The string value in this field is shown in the Store Commerce app and Store Commerce for web cart line and printed on the Store Commerce app and Store Commerce for web customer receipts. Cashiers and customers can see this description. It's the primary means for Store Commerce app and Store Commerce for web users and customers to know which discount was applied.

Discount type

Commerce has five types of discounts: Discount, Discount with quantity limit, Quantity, Mix and match, and Threshold. Set the discount type when you first create a discount. You can't change it later, except for Discount and Discount with quantity limit where the two discount types can switch to the other by changing the quantity limit. The discount type determines whether there's a quantity or amount criterion that must be met to qualify for the discount.

Status

The status of a discount can be either Enabled or Disabled. When you create a discount, the status is Disabled. You can only edit discounts when they're disabled. When you push discount data to a channel, the process doesn't push disabled discounts if the Clean up irrelevant master data after sync parameter in Commerce scheduler parameters is enabled. If a discount was previously enabled and pushed to the channel, this new push removes the discount from the channel if the Clean up irrelevant master data after sync parameter is enabled. When you change the status to Enabled, the system performs various validation checks on the discount, depending on the type of discount. The list of validation checks increased in recent updates of the product to prevent incomplete or poorly defined discounts from being pushed to commerce channels. Here's a partial list of the validations that the system performs when you enable a discount:

• A discount must have at least one discount line.
• The percentage value for a percentage discount must be more than 0 (zero) and less than or equal to 100.
• The amount value for an amount discount must be more than 0 (zero). Zero and negative amounts aren't valid.
• A discount must have at least one price group. A discount that doesn't have a price group is never applied to a transaction.
• A Unit of measure (UoM) is required for quantity and mix-and-match discount lines.
• For quantity discounts that have two or more quantity tiers, the discount value must increase as quantities increase.
• For threshold discounts that have two or more threshold tiers, the discount value for each tier must be equal to or more than the largest discount of the previous tier.
• For mix-and-match least-expensive discounts, the number of least-expensive products must be more than 1 and less than the number of products that are required to trigger the discount.

Currency

The currency of a discount defines the currency of all amount and price fields on the discount. Different discount types have different field options. The currency also acts as a filter during discount calculation. In Commerce, all sales order and Store Commerce app/Store Commerce for web transactions have a currency, and the pricing engine only considers discounts that have the same currency.

Discount concurrency mode

This mode determines which discounts compete on a transaction, and which discounts compound together. The three values for this option are Exclusive, Best price, and Compounded.

If all other settings are the same, the system always evaluates and applies Exclusive discounts before it evaluates Best price and Compounded discounts. Exclusive discounts prevent the application of all other discounts to the same lines where they're applied. Two or more Exclusive discounts compete for the best price.

When you set the discount concurrency control to Best price and compound within priority, never compound across priorities, the system combines all Compounded discounts within the same pricing priority, and the combined result competes with any Best price discounts in the same pricing priority. After the discount is applied to a transaction line, the system ignores all discounts at lower pricing priorities.

When you set the discount concurrency control to Best price only within priority, always compound across priority, the system treats all Best price and Compounded discounts as a Best price discount within a single pricing priority and they compete to determine the best discount for that pricing priority. Only a single discount can be applied to a product per pricing priority. If that single discount is a Best price or Compounded discount, it compounds with the best discount of Best price or Compounded discounts at lower pricing priorities.

When multiple discounts are applied to a transaction line, the system applies them in the following order:

• Discount price discounts
• Amount-off discounts
• Percentage-off discounts

Compound discounts compete with Best price discounts when both types apply to a transaction line. Therefore, the Compound setting is used to determine which discounts are combined. Depending on the discount concurrency control mode used, two or more Compound discounts can be combined and compete with the Best price discounts that apply to the same products. The discount or discounts that have the largest total discount amount are applied.

Discount account

Commerce lets you post discount amounts for a transaction to a separate general ledger (GL) account. The product or customer sets the discount GL account. Commerce offers a unique way to separate the discount amounts during posting. You can post each type of discount to a specific GL account. Both options can make it easier for you to determine which discounts or discount types are being used in your general ledger.

Coupon code required

Starting with version 7.2 of the app, the call center coupons are merged with discounts. For a discount, when you set Coupon code required to Yes, the Status field and the standard date fields, Effective date and Expiration date, aren't available. The equivalent properties on the Coupons page control these properties.

When you set Coupon code required to Yes on a discount, the Store Commerce app or Store Commerce for web applies the discount to a transaction only if the coupon code or bar code is provided. You define and configure the values of the coupon codes and bar codes in a separate page named Coupons. The Coupons page is where you link the coupon to the discount. When you set Coupon code required to No, a coupon code isn't required, and the discount is always applied through its price groups.

Override priority and Pricing priority

These two fields work together. When you set Override priority to Yes, the Pricing priority field becomes available for editing. You can then select a pricing priority to set directly on the discount. When you set Override priority to No, the priority is inherited from the priority of the price group associated with the discount. In the case of multiple price groups association, the priority number is determined by selecting the highest pricing priority of all the price groups associated with the discount.

Match all associated price groups

In Commerce version 10.0.16 and later, a configuration called Match all associated price groups is available on all discount forms. If you enable the configuration, the discount is only considered if all the price groups associated to the discount are applicable to the transaction. For example, if the two price groups named "PG-Student" (price group for student affiliation) and "RP-Houston" (price group for the Houston store) are associated to a discount, and Match all associated price groups is enabled, the discount is only considered for students who are shopping in the Houston store. This configuration provides a way to restrict affiliation and loyalty-based discounts to limited stores.

Description

This field is a free-form text field. It isn't used in the Store Commerce app or Store Commerce for web systems, or in transactions.

Disclaimer

This field is for free-form text. It isn't used in the Store Commerce app or Store Commerce for web systems, or in transactions.

Line type

This field is on all discount lines. The possible values are Include and Exclude. Use this field in combination with the Category, Product, and Variant fields to define the set of products that the discount applies to. Exclude discount lines always override include discount lines. When Line type is Exclude, many of the other fields on the discount line are grayed out, as they don't apply.

Unit of measure

Unit of measure (UoM) is a field on all discount lines except threshold discount lines. Commerce labels this field as Unit. The Unit of measure field acts as a filter to determine whether a discount applies to a transaction line. The UoM on the transaction line must match the UoM on the discount line. Otherwise, the system doesn't consider the discount line during discount calculation. The system doesn't convert UoM during discount calculation.

Category, product, variant, and dimensions

Category, Product, Variant, and Dimensions are the last discount settings that are common to all discounts. Set these fields on each discount line to specify what you're discounting. They act as a filter when the pricing engine searches for discounts that it can apply to a transaction. These fields relate to each other according to these rules: categories contain products, and products come in different variations of size, color, style, and configuration.

The pricing engine doesn't use the parent and child relationships of categories, products, and variants to order discounts during discount calculation. This behavior differs from the way that the pricing engine handles sales price trade agreements. For example, both a discount for 10 percent on a category and a discount for 5 percent on a product in the same category are considered. If all other properties are the same and the discounts aren't set to Compounded, the larger of the two discount amounts is used. If the discounts are set to Compounded, they're both combined. If you want to force a product discount to be used over a category discount, use pricing priority or the discount's concurrence mode to cause one discount to be applied before another.

When you edit discounts, the Category, Product, Variant, and Dimensions settings act as filters for each other. The Category and Product fields are automatically set from the Commerce Category Hierarchy if you enter a product or variant directly. The following sections provide detailed descriptions of each of these fields.

Category

At a minimum, set the Category field. Select any category from the product category hierarchy or any category from a supplemental category hierarchy. However, you can't select categories from channel navigation hierarchies or other noncommerce hierarchies. If you specify only a category on a discount line, the discount applies to any product in that category (including products that you add to the category after the discount is created) if all other discount criteria are met, such as currency and UoM.

The capability to work with categories is a key differentiator between discounts and trade agreement discounts, and the main reason that Microsoft discourages using trade agreement discounts. Categories are organized in a multilevel hierarchy. By contrast, the item discount groups that trade agreements use are only a single level of grouping. Each group is specific to one of the three trade agreement discount types, such as Line discount, Multiline discount, and Total discount. Therefore, for trade agreements, if you want to use the same set of products in all three trade agreement discount types, you must create and manage three independent discount groups. However, for discounts, you must maintain only one category. You can then use that category in all four discount types. You can also use the same category in price adjustments, assortment management, and loyalty management.

Product

The product can be a released product or a released product master. All discounts are company specific. Therefore, they work only with released products. If you select a product master, the discount applies to all variants of the product, even variants that are released after the discount is created, provided that all other discount criteria are met, such as currency and UoM.

Variant

When you select a variant on a discount line, the discount applies to just that variant, provided that all other discount criteria are met, such as currency and UoM.

Dimensions

Starting with the Retail 8.1.1 release, the capability to set up discounts at a dimension level for a product was added. This capability provides the flexibility to choose one or more dimensions of a product as discount lines. This flexibility saves the merchandising manager from individually adding the variants on which the discounts apply. For example, you can specify a discount on all variants with a specific style or you can specify a discount on all variants that are of a specific color and style.

Improved discount calculation

The ability to find and calculate applicable discounts in a performant manner is a critical factor that affects a retailer's overall business efficiency. As of the Commerce version 10.0.23 release, the Commerce pricing engine includes an improved discount calculation feature that uses a flattened data schema to achieve faster discount lookup and calculation at runtime. When you enable this feature, Commerce headquarters denormalizes discount data before sending it to channel databases. The publication of flattened discount data is then automatically triggered when you enable a discount.

To enable the improved discount calculation feature, follow these steps:

1. In Commerce headquarters, go to Retail and Commerce > Pricing and discounts.
2. Select Process commerce discounts.
3. In the dialog box that appears, schedule the batch job to run on a recurrent basis.
4. Go to Workspaces > Feature management.
5. Search for and enable the Improve discount computation performance by using flattened discount tables feature.
6. Run the 1020 (Prices and discounts) and 1070 (Channel configuration) distribution schedule jobs.

Best practices

• Before you create discounts, document your discounting strategy and procedure. Keep your documentation up to date as your use of the product evolves.
• Use independent number sequences for each discount type and configure the number sequences so that the discount ID by itself indicates the discount type. For example, prefix the ID of each discount type with a different alphanumeric constant: Q for quantity, MM for mix and match, and so on.
• Test your discount configuration by using the price simulator before you enable discounts. The price simulator has an option that lets you treat disabled discounts as enabled. This option is designed specifically for testing discounts before they're enabled.
• Expire discounts when they're no longer valid. In this way, you prevent the total number of discounts that the pricing engine considers during a transaction from growing unbounded. Otherwise, the performance of discount calculation can be affected over time.
• Use supplemental categories to group products, such as clearance products or last season products.
• Always avoid or minimize overlapping discount lines.