Providing minimum royalty amount per settlement

[pagarwal997]

Hello - We have a requirement to pay Royalty to a Vendor based on the number of units sold. For example:

• pay the vendor $1/unit invoiced
• 2500 units invoiced for that calendar period
• However the negotiated contract with the vendor states we need to pay a minimum of $3000 per calendar period.

How would one go about setting that up?

[former_member845091]

Hi Pranay,

I suggest you to use two Settlement condition types.

1. Fixed amount of $3000 (lets say ZRE1)

2. Quantity based condition type with scale of minimum target 3000 qty. (let's say ZRE2)

3. If ZRE2 has a value, exclude the ZRE1. In this way if ZRE2 is not active, a minimum of $3000 will be paid out using ZRE1

4. If you want this logic per each settlement period, you need to tweak into the usage of the condition records. Please check/search the relevant threads where some solutions were already provided.

Regards,

Anji

[prasad_pisharam]

I think we can solve this situation through the settlement management functionality. using Condition contract process. we need to play around with the pricing routines. I have experienced this in one of my project. the minimum Royalty payout v/s the actual royalty payout.

[pagarwal997]

Hi Prasad - I think we can do it too, just need to get creative. I like Thorsten & Anji's suggestions, we will try them both and let everyone know if it works.

[thorsten_kraemer]

Hi Pranay,

It has nothing to do with a value contract.

Just add a fixed amount condition to your contract and and use exclusion logic to control the payout.

Regards,

Thorsten

[pagarwal997]

I like this suggestion, we will try to set it up and get back to you.

[Lakshmipathi]

From your post, it seems, irrespective of number of units sold, you need to pay $ 3000 per year, in which case, you can go with Value Contract

[pagarwal997]

I don't think this would be the best approach for this case, since we will need to pay the vendor $1/unit when we invoice more than 3000 units.