# M3 Customer Order Margin and Discount Calculator > Source: https://netray.co/tools/m3-customer-order-margin-discount-calculator > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Test how stacked discounts, rebates and freight erode margin on a customer order line before you set up price lists and discount models. ## Category infor-cloudsuite ## Erp Infor M3 ## Audience - M3 consultant - Sales operations - Pricing analyst ## Tool **Kind:** calculator **Inputs:** #### Order quantity **Key:** qty **Type:** number **Default:** 200 **Min:** 0 **Step:** 10 **Unit:** units #### List price per unit **Key:** list_price **Type:** number **Default:** 64 **Min:** 0 **Step:** 1 **Unit:** $ #### Discount 1 (price list or customer) **Key:** d1 **Type:** slider **Default:** 10 **Min:** 0 **Max:** 50 **Step:** 1 **Unit:** % #### Discount 2 (volume or agreement) **Key:** d2 **Type:** number **Default:** 5 **Min:** 0 **Max:** 50 **Step:** 0.5 **Unit:** % #### Unit cost **Key:** unit_cost **Type:** number **Default:** 38 **Min:** 0 **Step:** 0.5 **Unit:** $ #### Back-end rebate **Key:** rebate_pct **Type:** number **Default:** 2 **Min:** 0 **Max:** 30 **Step:** 0.5 **Unit:** % **Help:** Paid after the sale as a percentage of net revenue. #### Freight absorbed on order **Key:** freight **Type:** number **Default:** 150 **Min:** 0 **Step:** 10 **Unit:** $ **Outputs:** #### Net unit price **Key:** net_price **Expr:** list_price * (1 - d1 / 100) * (1 - d2 / 100) **Format:** currency #### Effective total discount **Key:** eff_disc **Expr:** (1 - net_price / list_price) * 100 **Format:** percent **Description:** Stacked discounts multiply, they do not simply add. #### Net revenue **Key:** revenue **Expr:** net_price * qty **Format:** currency #### Rebate cost **Key:** rebate **Expr:** revenue * rebate_pct / 100 **Format:** currency #### Gross profit after rebate and freight **Key:** gp **Expr:** revenue - rebate - unit_cost * qty - freight **Format:** currency **Primary:** true #### Margin on net revenue **Key:** margin_pct **Expr:** gp / revenue * 100 **Format:** percent **Primary:** true **Chart:** #### Margin vs first discount **Type:** line **X:** d1 **From:** 0 **To:** 40 **Steps:** 40 **Series:** - margin_pct **Disclaimer:** Illustration only. How discounts stack and in what order depends on the discount model configured in your system, so confirm the sequence before relying on the effective rate. ## Content **Intro:** Discounts in layers look harmless one at a time. This calculator multiplies them the way a stacked pricing model does, adds rebate and freight, and shows what is left of the margin. **Sections:** #### How to use it **Body:** Enter the line quantity, list price and cost, then the first and second discounts as they would be applied by your price list and agreement. Add any back-end rebate and freight you absorb. The result shows net unit price, the effective combined discount, gross profit and the margin on net revenue. Move the first discount slider to see how quickly the margin falls, which helps when deciding what discount authority to give to sales. **Bullets:** - Enter discounts in the order the system applies them - Use fully loaded unit cost where possible - Include rebates that are accrued, not only invoiced - Check small orders where freight dominates #### The arithmetic **Body:** Net price equals list price times (1 minus first discount) times (1 minus second discount). A 10% and 5% stack is therefore 14.5% total, not 15%. Revenue is net price times quantity. Rebate is a percentage of that revenue. Gross profit is revenue minus rebate, minus cost of goods, minus freight. Margin is gross profit divided by net revenue, and not by cost, so it is not the same as markup. #### Interpreting margin **Body:** A small price cut costs far more margin than it appears, because the whole cut falls straight onto profit while cost stays fixed. At a 40% margin, a 5% price cut reduces profit by roughly an eighth. Use the chart to find the discount at which margin hits your floor, and use that as a guardrail when defining discount limits. **Bullets:** - Margin and markup are different measures - Agree a margin floor per customer class - Review exceptions rather than the average #### Common mistakes **Body:** Adding discount percentages instead of multiplying them is the most common one. Leaving out the rebate accrual overstates profitability for key accounts. Using standard cost when actual cost is rising hides a shrinking margin. Finally, applying one margin rule to every product ignores that commodity and specialty items behave very differently. **Cta:** If you want order line margin checked against live M3 pricing and cost data, with exceptions flagged, Netray can build that as a read-only report. **Faq:** #### Why is the effective discount lower than the sum? **Answer:** Because each discount applies to the already discounted price. A 10% and a 5% discount produce 1 minus 0.9 times 0.95, which is 14.5%, not 15%. #### Should freight be included? **Answer:** Include it when you absorb it on the order, because it lowers the profit you actually keep. Skip it for orders where the customer pays freight. #### Is margin on revenue or cost? **Answer:** This tool shows margin on net revenue, which is gross profit divided by revenue. Markup is gross profit divided by cost and will always be a higher number for the same deal. #### Can I model more than two discounts? **Answer:** Combine extra layers manually by multiplying their complements, then enter the combined percentage as one of the discounts. The total effective discount output helps verify your result. ## Search terms m3 pricing discount model, order line margin calculator, stacked discount calculator, gross margin after rebate, infor m3 customer order pricing, discount impact on margin, price list margin check --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json