In some cases, you may prefer to give clients fixed-amount discounts (for example, €700) rather than percentage discounts, which are available as a default in Productive for service line items. This article focuses on potential issues and the best ways to address them effectively.
Challenges with Fixed-Amount Discounts
Fixed-amount discounts can be tricky when applied to an entire budget. For example, if you have a budget with 5 services and subtract €700 from the total, it’s unclear which service should absorb this amount.
Splitting the discount accurately and maintaining precise reports becomes difficult.
Therefore, fixed-amount discounts are best applied to individual services rather than the entire budget.
Here are some best practices to handle fixed-amount discounts efficiently.
Best Practices
In all of these examples, we want to give our client a €700 discount for the service of Wordpress Implementation.
#1 Edit the Number of Billable Hours
One approach is to reduce the number of billable hours to lower the total price.
Example: Reduce the quantity of "Wordpress Implementation" from 100 to 90 hours, effectively creating a €700 discount.
This method, however, doesn't clearly communicate the discount to the client. For clearer communication, consider the following options.
#2 Negative Line Item for the Same Service Type
Create a fixed discount by adding a negative line item under the same service type.
Example: Add a "Wordpress Implementation Discount" service priced at -€700 per piece.
This way, the client can see the discount directly on the invoice. Additionally, the €700 discount will be reported under the "Wordpress Implementation" service type in profitability reports.
#3 Create a "Fixed Discount" Service Type
Apply the same logic as above but create a new service type called "Discount".
Example: Create a "Discount" service type and apply a €700 discount for the "Wordpress Implementation" service.
This method allows for better tracking of discounts across all budgets. You can generate reports on the "Discount" service type to see how many discounts have been applied overall.
#4 Add a Description
Further specify the discount type and provide context by adding a description to the service:
Example: Include a description like "Fixed-amount discount" to clarify the reason for the discount.
Reporting Discounts
By using these best practices, you can maintain accurate and clear profitability reports. Here's an example of a profitability report grouped by service type, where the discount is a separate service type:
Example: A profitability report showing "Discount" as a separate service type.
Conclusion
These best practices should help you manage fixed-amount discounts more effectively. However, we still recommend focusing on percentage discounts whenever possible.
You can add the discount column by accessing the additional option through the three-dot menu located next to the service section name.
