Example: Sales Rule as Sales Grading

Rather than using a fixed percentage of sales for sales-based rent, sales grading agreements are often made. In these agreements, the amount of sales-based rent is graduated relative to defined amounts of sales (sales gradings).

The share of rent derived from these defined sales amounts can be set as a fixed value (such as an amount or quantity per unit) or determined using a percentage rate.

Algorithm for the calculation:

Using the reported sales, the system searches the gradings from lowest to highest until it finds one in which the sales fall completely. (Exception: gradings that are not completely defined, that is, in which sales are limited. See sales rule 3 below.) Once a grading is found, any subsequent higher gradings are ignored.

The value in the Sales To field in the applicable grading is deducted from the reported sales. The difference is calculated using the entered percentage/amount. The remaining reported sales are then placed in the next lower grading, and this procedure is followed until no more sales remain. The individual amounts are then finally added together.

The type of entries in the grading table therefore have different effects:

1. Interval grading:with interval gradings, sales are divided into intervals.

In this case, the sales-based rent is determined as follows:

Sales = 900,000 The sales are completely within the first sales grading. →Sales-based rent = 20,000

Sales = 7 million The sales are distributed over all gradings. (7,000,000 – 3,000,000 = 4,000,000) * 7 % = 280,000 Remainder = 3,000,000

+ (3,000,000 – 1,000,000 = 2,000,000)* 6 % = 120,000 Remainder = 1,000,000

+ (1,000,000 – 0 = 1,000,000) = 20,000

→Sales-based rent = 420.000

2. Gradings that start with 0:The full sales that fall in one of these gradings arecalculated using the entered percentage or amount.

Sales = 7 million The complete sales are divided by 7% = 490,000.

(7,000,000 – 0 = 7,000,000) * 7 % = 490,000 Remainder = 0

3. Mixed gradings:These are a mixture of rule 1 and rule 2; they overlap and are not completely defined.

Overlapping: the grading amounts are not consecutive. The system calculates using the first (lowest) grading.

Completely defined: The grading is not completely defined until you enter a value for infinite in the last row of the Sales To column. Infinite means0in this context. If you do not want to define the grading completely, then limit the sales used for the calculation to the sales in the Sales To field.

Sales = 7 million Sales are above the highest sales grading. In this case 5 million is used for calculating sales-based rent. (5,000,000 – 2,000,000 = 3,000,000) * 7 % = 210,000 Remainder = 2,000,000

+ (2,000,000 – 0 = 2,000,000)* 6 % = 120,000 Remainder = 0

→Sales-based rent = 330,000

Sales = 2,500,000. The sales are completely within the second grading. The grading above it is ignored. The total sales are calculated with 6%: Sales-based rent = 150,000.