Rebates

Rebate management represents a step in the Agreement quoting and sales process in the CPQ. it should enable Valio to offer dynamic incentives through structured discount programs. The goal of this chapter is to describe the functional and technical principles behind the diffrent types of rebates, how they interact with sales data, and the structure expected in the final CPQ system.

Rebate Calculation Logic

The rebate logic is captured in a dedicated tab in the Quote Structure and is derived from an Excel-based model that defines thresholds, product exclusions, deal size contributions, and eligible rebate percentages or amounts. Key considerations include:

Sales Contribution and eligibility: Total sales may include ineligible product categories (such as alcohol), which are excluded from rebate payments but still contribute to achieving rebate thresholds.
Eligibility Tagging: Each product line item must be tagged to indicate whether it is eligible for rebate. This tagging will influence both the rebate amount and the gross margin calculation.
Net Price Exclusions: Net price items typically do not qualify for rebates. The system should be able to identify these and exclude them from rebate calculations while retaining them in contribution metrics.
Line-Level Controls: Rules must be implemented at the line item level to control whether rebates apply, based on attributes such as product group, discount type, or pricing model.

Yearly rebates

Yearly rebates are structured in threshold-based tiers. These thresholds are calculated based on total deal size, and rebates apply only to eligible sales:

Scaling Logic: a Lookup table will define the applicable scale for a given deal size. These tables may contain up to 10 tiers, but only relevant levels will be shown based on deal configuration.
Overrides: Sales reps can override recommended rebate percentages, but initial values must be pre-populated based on default business logic.
Dynamic Calculation: The scale is determined dynamically. The system calculates the correct threshold tier, applies the corresponding rebate percentage, and propagates this value through quote line items.

Edit 07 Sep 2025 : Calculation process and data flow

Depending on the “Sales At Deal Level” value, the system determines a “Multiple” value using the “Sales Deal Threshold” lookup. This value is applied in the “Sales Contribution Threshold” for each sales contribution level, following this formula:

CODE

Sales Contribution Treshold Level[i] =  (Round (Sales At Deal Level / Multiple) * Multiple) + ((Level-4)* Multiple)
where i = Level

The calculated value serves as the default for the Sales Contribution Threshold at each level. The calculated Sales Contribution Threshold are used as input in the “Rebates Yearly Discount” Lookup to determine the Start, Target, and Floor rebate percentages.

The “Rebate %” fields are set with the Target value and controlled by the Start and Floor values. If the Rebate % value falls outside the Start-Floor range, an error message will display for the user.

the “Sales Contribution Treshold Level“ and “Rebates %“ are set with default value and can be changed by the User

The following diagram shows the data flow between the Quote Model fields and lookups

Marketing Support Rebates

Marketing rebates differ from yearly rebates in several key ways:

Fixed Amounts: Marketing rebates are often fixed (example: 2,000€ for deals above 500,000€), regardless of exclusions such as net price.
Non-Scalable: Unlike yearly rebates, marketing rebates are not calculated on a sliding scale.
Field Visibility: The rebate amount is always displayed as the full agreed value, not prorated based on eligibility.

Marketing rebate tables are separate from yearly rebates and involve different logic and display behavior.

5. Sales Rep Interaction and Experience

The CPQ interface must support intuitive rebate handling:

Pre-Populated Recommendations: When sales reps access the rebate page, default rebate values (floor, target, ceiling) are displayed based on deal size and customer profile.
Editable Fields: Sales reps can adjust scales and percentages, triggering dynamic recalculations of quote totals and margins.
Comment Fields: Additional free-text fields will be added to allow justification for rebate overrides or custom marketing events.

One Off Rebates

One off Rebates capture Other rebate-related components, this include:

Signing Bonus
Marketing Event
Expo Travel
Branded Chef Accessories
Other (option to specify the reason)
Brand exposure

Aditional Customer IDs:

A dedicated field will capture non-standard rebate recipient IDs for back-office reference. This field is informational and not calculated. the customer ID field will be free text, an informative field

Edit 02 Jul 2025 : If Standard Rebate payment procedures is set to "No" , the Customer ID field becomes mandatory, specifically to allow specifying an alternative customer ID (different from the primary customer ID) to which the rebate payment should be directed.

Data Structure and Integration Points

Lookup Tables:

Two core lookup tables will be created: one for yearly rebates (thresholds and scales) and one for marketing rebates (deal-size triggers). (Logic to be Defined)

Tagging Logic:

Eligibility tags must be synchronized between product master data, quote lines, and pricing logic. (Logic to be Defined)

Integration with Margin Calculation:

Rebate impacts must reflect in margin computations, particularly when affecting net price lines. (Logic to be Defined)