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‘Targeted unit rate with targets in units’ mechanism

Description

A mechanism where the earnings are an amount per unit volume, but the size of this amount depends on the level of transacted value achieved.

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Example

A program line for which the earnings are £0.50 per unit if transacted value is less than 500,000 units, £0.65 per unit if transacted value is greater than or equal to 500,000 units but less than 750,000 units, or £0.80 per unit if transacted value is greater than or equal to 750,000 units.

Configuration approach

Within Enable, you will be required to:

  • Configure one or more target bands, with a  target and a per unit rate for each, as illustrated below:

Target (units)

Rate per unit (GBP)

10,000

2.00

15,000

2.50

20,000

3.00
  • Select one or more items for each dimension that has been configured for you as included items for the program line.

Enable will select matching transactions for the program line, based on:

  • The trading partner to which the program line belongs.
  • The user’s dimension item selections.
  • The start and end date of the program line.
  • The currency of the parent trading program.

To calculate an earnings result for the program line as a whole, Enable will compare the total for transacted units across the matching transactions with the targets that have been configured for the program line to determine which target band, and therefore which per unit rate, applies.

To calculate an earnings result for each matching transaction, Enable will multiply the per unit rate that applies to the program line by the entry for transacted units that applies to the transaction.

Optional settings

You will be able (but not required) to use the ‘Mechanism details’ area of the program line configuration page to:

  • Untick the Retrospective? tick box.
  • Tick the Separate target and earning transactions? tick box.

Retrospective vs Non-Retrospective

For a program line that uses the Targeted unit rate with targets in units plug-in, the Retrospective? tick box is ticked by default. When the Retrospective? box is ticked, the earnings will be calculated with the achieved rate applied retrospectively, or ‘back to zero’.

If the Retrospective? box is unticked, Enable will instead perform a non-retrospective calculation that involves applying each of the achieved rates to the transactions that ‘belong’ to the corresponding target band.

Consider for example a program line that has target bands as follows:


Target (units)

Rate (%)

10,000

2.00

15,000

2.50

20,000

3.00

If the total for included transactions is 18,000 units, Enable will calculate the earnings as:

  • £2.50 per unit x 18,000 units = £45,000 if the Retrospective? box is ticked;
  • £2.00 per units x (15,000 units - 10,000 units) + £2.50 per unit x (18,000 units - 15,000 units) = £17,500 if the Retrospective? box is not ticked.

The above example shows how the program line level result for earnings would be calculated for a non-retrospective program line that uses the Targeted unit rate with targets in units plug-in.

To calculate an earnings result for each of the included transactions for such a program line, Enable will use the entries for transacted units from the included transactions to apportion the program line level result for earnings and derive an earnings result for each of the included transactions.

Separate target and earning transactions?

For a program line that uses the Targeted unit rate with targets in units plug-in, the Separate target and earning transactions? tick box is unticked by default.

When the Separate target and earning transactions? box is unticked:

  • You will be required to configure a single set of dimension items as included items for the program line, where the set of included items contains at least one item for each dimension that has been configured for you.
  • Enable will:
  • Use the set of included dimension items, in conjunction with the start and end dates of the program line and the currency of the parent trading program, to select a single set of matching transactions for the program line;
  • Use the set of matching transactions, in conjunction with the target bands that have been configured for the program line, to calculate the earnings.

When the Separate target and earning transactions? box is ticked:

  • You will be required to configure two sets of dimension items — one for target transactions and one for earning transactions — where each set of included items contains at least one item for each dimension that has been configured for you.
  • Enable will:
  • Use the two sets of included dimension items, in conjunction with the start and end dates of the program line and the currency of the parent trading program, to select two sets of matching transactions for the program line – one for target transactions and one for earning transactions;
  • Use the target transactions to determine which target band, and therefore which percentage rate, applies to the program line;
  • Use the earning transactions to calculate the earnings for the program line;
  • Assign earnings to all of the earning transactions and none of the target transactions.
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