The Rule of Amortization

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In this article, we will introduce the following topics:


A. The types of "Promotions & Campaigns" and "Products & Items" can be amortized the discount 

Types of promotions & campaigns can be amortized
The event type of discount amount, discount % ( e.g. All Products discount, Selected Products/Categories discount, Bundle Pricing discount, Storewide discount for the membership tier ) 

Types of promotions & campaigns can’t be amortized
Store credit, Free shipping discount, Additional fee in payment options

Types of products & items can be amortized
Product, Subscription Product

Types of products & items can’t be amortized
Add-on Item, Shipping Cart Add-on Item, Free Gift, Custom Product by “Create Order” function


B. How system amortizes the discount to products in each order

While an order is placed, the system would run a background process that automatically amortizes the applied discount to each related product and item in the order. The flow of check-out in the shop would not be changed. So you may see the amortized discount shown in the order report.

Besides, while using the feature of "Order split" to move products from parent order to child order, the amortized discount would be split as well. If you would like to know how it would distribute amortized discount, you may refer to this article: [Coming soon ] How to allocate promotion discount when splitting orders
  • Type of promotions & campaigns is “Selected Products, Selected Categories, Bundle Pricing”: 
    The system would amortize product-level discount to "products/subscription products" based on product price proportion in order that applied for the promotion event. Products/subscription products which aren’t applied for promotion event would not amortize discount. 
  • Type of promotions & campaigns is “All Products”: 
    The system would amortize discounts to products/subscription products based on discount product price proportion in order.

According to promotion offer calculation logic, if a product is applied for both purchase condition ( e.g. “Total Order Over...” and “Selected Products, Selected Categories, Bundle Pricing”), system would prioritize to calculate how much amortization in “Selected Products, Selected Categories, Bundle Pricing” discount, then base on the subtotal of product-level discount to calculate each product proportion of amortization in “Total Order Over...” discount.

 *While the price has decimal digits, the system would follow odd-even rounding rule to process digits.


C. How amortization of each product be shown in order report

If merchants would like to know amortization of each product in an order, merchant can select the following fields in order report to check amortization while exporting the report:

  • Product-Level Promotion: Display the name of applied promotions & campaigns which type is “Selected Products, Selected Categories, Bundle Pricing”.
  • Product-Level Discount: Display the discount of applied promotions & campaigns which type is “Selected Products, Selected Categories, Bundle Pricing”.
  • Order-Level Promotion: Display the name of applied promotions & campaigns which type is “All products”.
  • Order-Level Discount: Display the discount of applied promotions & campaigns which type is “All products”.
Notice: The feature of discount amortization has been released since 2019/11/27.

1. Orders placed after the feature released, the above fields would display accordingly information in order report if a product item is applied for promotions & campaigns.
2. Orders placed before the feature released, the above fields would display N/A, even if a product item was applied for product-level / order-lever promotions & campaigns.
3. The above fields would remain blank if a product item isn’t applied for any promotions & campaigns.
4. Free shipping and free gifts promotion are not applicable in above fields


D. Example

Here is a example order has 6 product items. The products are going to be applied for selected products promotion and all products promotion respectively. We would present how the amortization be calculated in this order.

[ Product Details ]

Product Name Price Quantity Total Price ( Price x Quantity )
Product A 200 2 200x2=400
Product B 150 1 150x1=150
Product C 150 1 150x1=150
Product D 100 2 100x2=200
Product E 100 2 100x2=200
Add-on item F 20 1 20x1=20

[ General information of promotions that the order is going to be applied ]

  • Type of promotion: All products
    Promotion name: Get $100 off on Entire Order with purchase over $888
    Discount $100 in this promotion
  • Type of promotion: Bundle Pricing
    Promotion name: Purchase 3 items of Product A & Product B for $500
    Discount $50 in this promotion
  • Type of promotion: Selected Products
    Promotion name: Get 10% off on Product C & Product D with purchase of Selected Products over 2 items
    Discount $35 in this promotion

[ Discount Amortization in Product-Level Discount ]

Product Name Total Price ( Price x Quantity ) Promotion Name & Discount  Applied in the Product Amortization in Product-Level Discount
Product A 200x2=400

Purchase 3 items of Product A & Product B for $500


Discount: (400+150)-500=50
50*400/(400+150)=36
Product B 150x1=150 50*150/(400+150)=14
Product C 150x1=150

Get 10% off on Product C & Product D with purchase of Selected Products over 2 items


Discount: (150+200)*10%=35
35*150/(150+200)=15
Product D 100x2=200 35*200/(150+200)=20
Product E 100x2=200 No Selected Products / Bundle Pricing Discount  
Add-on item F 20x1=20 No Selected Products / Bundle Pricing Discount  
Total 1120    85

 

[ Discount Amortization in Order-Level Discount ]

Since system only calculates discount amortization of products / subscription products, the proportion used to calculate amortization in total order will exclude price of Add-on item F, and use the subtotal discount price in product-level discount and the product discount price to calculates the % to amortize the order-level discount.

For example, this order is fulfilled with the condition of Get $100 off on Entire Order with purchase over $888 promotion, so the order would receive $100 off in total price. The order level discount $100 would be amortized in Product A based on the proportion of product discount price in subtotal product-level discount without add-on item. 

You may refer following column for better understanding:

Product Name Total Price ( Price x Quantity ) Discount Amortization in Product-Level Discount Product Discount Price Discount Amortization in Order-Level Discount (e.g. $100 off)
Product A 400 36 400-36=364

100*(364/1015)

=35.86≌36

Product B 150 14 150-14=136

100*(136/1015)

=13

Product C 150 15 150-15=135

100*(135/1015)

=13

Product D 200 20 200-20=180

100*(180/1015)

=18

Product E 200 0 200-0=200

100* (200/1015)

=20

Add-on item F 20 N/A N/A N/A
Total 1120 85 1015 100

 

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