We have noticed a problem with the Commission calculation under Quote Entry, Worksheet Tab.
As commission is paid on the final sales price, the unit price to be quoted including commissioning (to ensure you get the desired mark-up or profit) should be:
(Cost of part with mark-up) / ( 1 - Commission Rate)
However it seems to be calculating as:
(Cost of part with mark-up) * ( 1 + Commission Rate)
So once the sales commission is paid, the amount of sales value that we receive is less than it should be.
The commission calculation should ensure that, after commission is paid, we receive the full sales value (which is the cost plus the mark-up).
See comparison of how Kinetic is calculating commission and how it should be calculated to ensure that we receive the full sales value (which is the cost plus the mark-up).
I’ll wade in and start this conversation. I don’t think Kinetic is wrong - as they coded for one formula - just not yours.
Your math shows that you don’t actually pay commissions on the cost+markup*comm% calculation. You’re showing that you pay commission on the selling price * comm% calculation. These two formulas are not the same, therefore the amount of the commission is different - and by extension any reverse calculation of unit price or profit will be different.
In your two examples, the cost and comm% are the same, therefore the actual commission to be paid should be the same. Leaving out everything else, $10.8k * 10% = $1080 for both exmaples. Then you show an (arbitrary?) selling price of $12k. You didn’t say how this was obtained, and then you proceed to reverse calculate the commission to by $1200 which changes the selling price/profit calculation.
You have a different formula. You may need to look into a BPM to override Kinetic’s calculation.
To clarify the £12,000 selling was calculated using the formula provided:
(Cost of part with mark-up) / ( 1 - Commission Rate)
10,800 / (1 - 0.10) = 10,800 / 0.9 = 12,000
If we sell an order with a value of 12,000 and we pay a sales agent 10% commission, their commission will always be calculated as 10% of the “sales value”.
So the commission amount to be built into the quoted price needs to be based on the “Sales”, not on the “Total price w/commission” value.
If it is based on the “Total price w/commission” value it will be lower, which means that we won’t build enough into the quoted price to pay 10% commission on the sales value.
I think your explanation is quite clear - and (disclaimer) we don’t use the commission calcs in Epicor because ours are even more complicated.
To me, it seems Epicor’s formula is not the one you want. In other words, there’s no problem with the Comm calculation on the worksheet tab but it’s just not the formula you want.
You state that
but did you get that from Epicor or is that your rule?
You then stated the formula should be
So I’m asking - are you saying it’s a problem b/c Epicor doesn’t do it the way you think it should - or did Epicor document the formula and you have noticed the worksheet tab is not doing it?
