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Price realisation on ten invoice lines: the whole arithmetic on one page

The complete price realisation calculation on ten invoice lines small enough to check by hand: the list price on the invoice date from a dated price list, the agreed discount from the customer's agreement, list value, agreed value and invoiced value per line, the unagreed discount as the difference, realisation per customer and per rep, the line that crossed a price change, and the identity that list less agreed less unagreed equals invoiced, so a reader can reproduce every figure and then run it on their own export.

By CoviragePublished 17 September 20263 min read
The short answerTen invoice lines across three customers and two reps. Each line has a quantity, an invoiced value, a list price on its invoice date from a dated price list, and an agreed discount from the customer's agreement. List value is quantity times list; agreed value is list value less the agreed discount; unagreed discount is agreed value less invoiced, floored at zero. Summed per customer and per rep, one rep gives away four times the other's unagreed discount, one line crossed a price change and is priced against the new list, and list less agreed less unagreed equals invoiced on every line. Every number can be reproduced by hand.

Price realisation is a comparison per line against two references, the list and the agreement, and on ten lines it can be done by hand. This page works it: the dated list, the agreements, the three values per line, the unagreed discount, the roll-ups and the identity.

The references

Price list, dated:

Product List to 31 Aug List from 1 Sep
P $100 $110
Q $50 $50

Agreements:

Customer Agreed discount
X 20%
Y 10%
Z 0%

The ten lines

Line Date Customer Rep Product Qty Invoiced List on date List value Agreed value Unagreed
1 10 Aug X R-1 P 100 $7,600 $100 $10,000 $8,000 $400
2 12 Aug X R-1 Q 200 $8,000 $50 $10,000 $8,000 $0
3 15 Aug Y R-2 P 50 $4,500 $100 $5,000 $4,500 $0
4 20 Aug Y R-2 Q 100 $4,400 $50 $5,000 $4,500 $100
5 22 Aug Z R-1 P 30 $2,700 $100 $3,000 $3,000 $300
6 28 Aug X R-1 P 80 $6,000 $100 $8,000 $6,400 $400
7 2 Sep X R-2 P 100 $8,800 $110 $11,000 $8,800 $0
8 5 Sep Z R-1 Q 60 $2,700 $50 $3,000 $3,000 $300
9 8 Sep Y R-1 P 40 $3,600 $110 $4,400 $3,960 $360
10 12 Sep Z R-2 P 20 $2,200 $110 $2,200 $2,200 $0
Total $50,500 $61,600 $52,360 $1,860

Line 7 crossed the price change: against the September list it is exactly at agreement. Against the August list it would show $800 of unagreed discount that does not exist.

The identity, per line and in total

list value − agreed discount − unagreed discount = invoiced 61,600 − (61,600 − 52,360) − 1,860 = 61,600 − 9,240 − 1,860 = $50,500

Holds.

Per customer

Customer Invoiced Agreed value Unagreed Realisation (invoiced ÷ list)
X $30,400 $31,200 $800 77.9% against an agreed 80%
Y $12,500 $12,960 $460 86.8% against an agreed 90%
Z $7,600 $8,200 $600 92.7% against an agreed 100%

Customer Z has no agreement and receives seven percent off anyway.

Per rep

Rep Invoiced Unagreed Share
R-1 $30,600 $1,760 5.8%
R-2 $19,900 $100 0.5%

Same customers, same products. Rep R-1's overrides are the finding.

Where it goes wrong, even at ten

Undated price list. Line 7 shows $800 of discount that is the price change.

Agreements not carried. Every line at X looks 22 percent discounted; the 20 that was agreed is indistinguishable from the 2 that was not.

Realisation alone. X at 78 percent looks worse than Z at 93; Z is the one with no agreement.

Per product only. R-1's overrides averaged across both reps.

From ten to ten thousand

The same three values per line, the dated list, the agreements, summed per customer, product and rep. Covirage runs it on the invoice lines every month. The price realisation guide covers the measure, and the discount thresholds guide covers what the unagreed figure leads to.

Questions people ask

What if the invoiced price is above the agreed one?

The unagreed discount is floored at zero and the line is flagged as invoiced above agreement, which is the other leak: the customer overcharged against its own contract. It is listed separately, because it becomes a credit.

Why does the price list need dates?

Line 7 was invoiced two days after a price change. Against the old list it looks discounted by eight percent; against the list in force on its date it is at agreement. Without dates, every line before a change looks wrong.

How is the per-rep figure read?

As a share of the rep's invoiced value. Rep R-1 gives away 5.7 percent in unagreed discounts; rep R-2 gives 1.2 percent. Same customers, same products, same agreements. The difference is overrides.

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