Pricing and Discounts by Subject
Table of Contents
Use Case:
Organizations need to monitor pricing and discount activity by customer to ensure commercial terms are applied consistently and align with company policies and applicable regulations. Unusual pricing or discount patterns associated with a particular customer may indicate favoritism, fraud, bribery, or anti-competitive behavior. For example, a customer that consistently receives significantly higher discounts or lower prices than comparable customers may warrant further review to confirm that the activity is appropriate and properly supported.
The Pricing and Discounts by Subject analytic identifies unusual pricing and discount patterns at the customer level. It can evaluate activity based on factors such as the number and value of discounted transactions, discounts as a percentage of total transaction value, and differences between net and expected pricing. By comparing customer activity across similar subjects, the analytic helps organizations detect excessive discounts, unusual price variances, inconsistent pricing practices, and other activity that may create financial, compliance, or reputational risk.
| Description | Identifies customers with unusual pricing or discount activity based on configured detection patterns, including discounted transaction volume, discount values, discount percentages, and variances between net and expected pricing. |
| Domain(s) | Customer Revenue |
| Analysis Type | Context Flag |
| Focus Area | Favor |
| Score Methodology | Customer activity is ranked relative to comparable customers for the selected detection pattern. |
Default Scoring Criteria
Importance: 3 (default)
Enabled: True (default)
No rules are configured by default. Rules must be set by user.
Rule Configuration
To configure a rule for this risk analysis:
1. From the Admin page, navigate to Risk Settings > Risk Analysis Settings > Pricing and Discounts by Subject (Customer Domain). Then, click Add A Rule.
2. Complete the following required rule fields:
| Rule Field | Description | Settings Options |
|---|---|---|
| Name | Name for the specific rule | Free text |
| Description | Description of the rule | Free text |
| Comparison Dimension | Defines how transactions are grouped for comparison when evaluating pricing and discount activity | No Dimension, Company Country, Company/Business Unit, Organizational Unit, or Subject Country |
| Context Period in Days | The period of time, from the transaction date, for which transactions are considered by the rule | 1 to 365 Days |
| Minimum Subjects in Cohort Required | The minimum number of comparable materials required to evaluate activity and generate a risk result | 1 to 100,000 Subjects |
| Discount (Count) Pattern | Identifies materials based on the number of discounted transactions | Enabled or Disabled |
| Discount (Gross) Pattern | Identifies materials based on the total value of discounts applied across eligible transactions | Enabled or Disabled |
| Discount (Percentage) Pattern | Identifies materials based on discounts as a percentage of the total transaction value | Enabled or Disabled |
| Variance of Pricing (Gross) Pattern | Identifies materials based on the difference between the expected (anchor) price and the net price | Enabled or Disabled |
| Variance of Pricing (Percentage) Pattern | Identifies materials based on the percentage difference between the expected (anchor) price and the net price | Enabled or Disabled |
| Detection pattern | Determines which pricing or discount metric is evaluated by the rule. | Percentile |
3. Click Add A Rule Component.
4. To set a component, select a Field and Search Type from the dropdowns.
The Value field will appear after you select a Field and Search Type.
See a description of Field, Search Type and Value below:
| Field | Search Type | Value Type |
|---|---|---|
| Company | Includes OR Excludes | List is populated from customer data* |
| Company Country | Includes OR Excludes | Preset list |
| Customer (Payer) | Includes OR Excludes | List is populated from customer data* |
| Has Free of Charge Item | Includes OR Excludes | Yes/No |
| Is Free of Charge (Line Item Only) | Includes OR Excludes | Yes/No |
| Material Type | Includes OR Excludes | Preset list |
| Organization Unit | Includes OR Excludes | List is populated from customer data* |
| Subject (Payer) Country | Includes OR Excludes | Preset list |
| Subject Account Group | Includes OR Excludes | List is populated from customer data* |
| Subject Classification | Includes OR Excludes | List is populated from customer data* |
| Transaction Reason | Includes OR Excludes | Preset List |
| Transaction Type | Includes OR Excludes | List is populated from customer data* |
*For values populated from customer data, value lists will not populate if data is not available.
Note: Where multiple rule components are set, they operate only in an “and” manner.
5. Click the Save Changes button at the bottom of the page to save your rule.
Exclusions
You can configure exclusions that remove certain transactions from the comparable data used to determine risk results. Available exclusions include:
- Transaction Amount: transactions with a total value of $100 or less are excluded.
- Transaction Type: only transactions classified as Sales are included.
- Transaction Reason: specific transaction reasons can be excluded, such as certain goods, services, corrections, returns, financial adjustments, or donations.
- Payer Classification 1: specific customer classifications can be excluded from the comparison data.
- Payer Classification 2: additional customer classifications can be excluded from the comparison data.
Transactions originating from financial documents rather than billing documents do not contain the pricing conditions required by the analytic and are therefore ineligible for a risk result.
Transactions marked as no longer valid are excluded from the aggregated comparison data. Additionally, only transactions with a positive pricing variance are eligible for a risk result.