Home 9 Advanced Features 9 Using Discounts

Using Discounts

LiteWork allows you to apply percentage-based discounts to line items, making it easy to offer promotions, early payment incentives, or volume discounts. Discounts are applied before tax calculations, and the discount amount is clearly shown on your invoices.

Perfect for: Client negotiations, loyalty discounts, bulk orders, promotional pricing, and early payment incentives.

How Discounts Work

Discount Basics

  • Percentage-based: Enter discount as percentage (e.g., 10% off)
  • Line-item level: Apply to individual line items
  • Pre-tax calculation: Discount applied before GST/tax
  • Transparent display: Original price and discount shown clearly

Discount Calculation Order

1. Start with Unit Price × Quantity
2. Apply Discount (subtract percentage)
3. Calculate Tax (on discounted amount)
4. Result = Line Total

Example:

Service: Website Design
Unit Price: $1,000
Quantity: 1
Discount: 20%
Tax Rate: 15%

Step 1: Base amount
  $1,000 × 1 = $1,000

Step 2: Apply discount
  $1,000 × 20% = $200 discount
  $1,000 - $200 = $800

Step 3: Calculate tax
  $800 × 15% = $120

Line Total: $920
  (Saved $200 + $30 in tax)

Applying Discounts to Line Items

Method 1: When Creating Line Item

  1. Click “Add Line Item” (Cmd/Ctrl + I)
  2. Fill in description, quantity, unit price
  3. Find “Discount” field
  4. Enter percentage (e.g., 10 for 10%)
  5. Discounted amount calculates automatically
  6. Click “Save”

Method 2: Editing Existing Line Item

  1. Click “Edit” (pencil icon) on line item
  2. Scroll to “Discount” field
  3. Enter or adjust percentage
  4. Preview shows updated total
  5. Click “Update”

Discount Field Format

  • Enter as number only: 10 (not 10%)
  • Decimal percentages: 12.5 for 12.5%
  • Range: 0% to 100%
  • Leave blank: No discount (0%)

💡 Tip: Enter the number without the % symbol. LiteWork adds it automatically.

How Discounts Display on Invoices

Line Item Display

On the invoice, discounted line items show:

Description Qty Unit Price Discount Line Total
Website Design 1 $1,000.00 -20% $920.00

Detailed Breakdown

Some invoice templates show detailed calculation:

Website Design
Quantity: 1 × $1,000.00 = $1,000.00
Discount (20%): -$200.00
Subtotal: $800.00
Tax (15%): $120.00
Line Total: $920.00

Invoice Totals Section

At the bottom of the invoice:

Subtotal: $800.00
Tax (15%): $120.00
Total: $920.00

You saved: $200.00 (20% discount applied)

💡 Tip: Enable “Show discount savings” in Settings to display total savings at the bottom of invoices.

Common Discount Scenarios

Scenario 1: Single Item Discount

Use case: Client negotiation on one service

Consulting Services: $2,000
Discount: 15%
Tax: 15%

Calculation:
  Base: $2,000
  Discount: -$300 (15%)
  Subtotal: $1,700
  Tax: $255
  Total: $1,955

Scenario 2: Bulk/Volume Discount

Use case: Discount for ordering multiple units

Logo Design
Quantity: 5
Unit Price: $200
Discount: 10% (bulk discount)
Tax: 15%

Calculation:
  Base: 5 × $200 = $1,000
  Discount: -$100 (10%)
  Subtotal: $900
  Tax: $135
  Total: $1,035

Scenario 3: Promotional Pricing

Use case: Limited-time promotion

Website Hosting (Annual)
Unit Price: $120
Discount: 25% (Black Friday sale)
Tax: 15%

Calculation:
  Base: $120
  Discount: -$30 (25%)
  Subtotal: $90
  Tax: $13.50
  Total: $103.50

Scenario 4: Early Payment Discount

Use case: Incentivize prompt payment

Services Rendered: $5,000
Discount: 2% (if paid within 7 days)
Tax: 15%

Calculation:
  Base: $5,000
  Discount: -$100 (2%)
  Subtotal: $4,900
  Tax: $735
  Total: $5,635

Scenario 5: Mixed Discounts

Use case: Different discounts on different items

Line 1: Design ($1,000) - 10% discount = $900
Line 2: Development ($2,000) - 15% discount = $1,700
Line 3: Hosting ($200) - No discount = $200

Subtotal: $2,800
Tax (15%): $420
Total: $3,220

Total savings: $400 (12.5% average discount)

Discount Best Practices

1. Use Clear Descriptions

Add notes explaining why discount was applied:

Good example:

Website Design
Unit Price: $1,000
Discount: 10% (Loyalty client discount)

Better approach: Add note in line item description:

Description: "Website Design (10% loyalty discount applied)"

2. Set Discount Policies

Establish standard discount rates:

  • Volume discounts: 5% for 3+ items, 10% for 5+
  • Early payment: 2% if paid within 7 days
  • Loyalty clients: 10% for 2+ year clients
  • Referrals: 5% for referred clients

3. Document for Accounting

  • Keep records of why discounts were given
  • Use consistent discount percentages
  • Add notes in invoice notes section
  • Useful for tax purposes and audits

4. Consider Tax Implications

  • Discounts reduce taxable amount (good for client)
  • Also reduces your GST collection
  • Large discounts may affect business valuations
  • Consult accountant for significant discounting

5. Use Quick Items with Discounts

Create Quick Items with pre-set discounts:

  • “Consulting – Hourly (Loyalty Rate)” with 10% discount
  • “Web Hosting – Annual (Prepay Discount)” with 15% discount
  • Faster than applying discount manually each time

Invoice-Level vs Line-Level Discounts

Line-Level Discounts (Current)

LiteWork currently supports line-level discounts only:

  • ✅ Apply different discounts to different items
  • ✅ Transparent (shows which items are discounted)
  • ✅ Flexible (negotiate on individual services)

Invoice-Level Discounts (Workaround)

To apply a discount to the entire invoice:

Option 1: Discount Every Line Item

  1. Apply same percentage to all line items
  2. Time-consuming but accurate

Option 2: Add Negative Line Item

  1. Calculate total discount amount
  2. Add line item: “Discount (10%)”
  3. Enter negative amount: -$200
  4. Set tax rate to 0%

Example:

Line 1: Service A - $1,000
Line 2: Service B - $500
Line 3: Discount (10%) - -$150

Subtotal: $1,350
Tax (15%): $202.50
Total: $1,552.50

⚠️ Note: This method doesn’t apply discount before tax. For accurate tax-exclusive discount, use line-level discounts.

Discounts and Xero Integration

How Discounts Sync to Xero

When posting to Xero:

  • Discounted line items sync with discount percentage preserved
  • Xero shows original price and discount
  • Tax calculated correctly (on discounted amount)
  • Totals match exactly

Xero Display

In Xero, discounted items appear as:

Item Qty Unit Price Discount Amount
Website Design 1 $1,000.00 20% $800.00

Xero Discount Limitations

Xero has some discount quirks:

  • Only percentage discounts supported (not fixed amounts)
  • Discount must be 0-100%
  • Very small discounts (<0.01%) may round to 0%

LiteWork handles these automatically. If discount can’t sync to Xero, you’ll see a warning before posting.

Advanced Discount Features

Discount Codes (Future Feature)

Coming soon: Promotional discount codes

  • Create discount codes (e.g., “SUMMER2024”)
  • Set percentage or fixed amount
  • Apply code at invoice level
  • Track usage and ROI

Tiered Discounts (Manual)

Create tiered volume discounts manually:

Quantity Discount
1-2 0%
3-5 5%
6-10 10%
11+ 15%

Apply appropriate discount based on quantity ordered.

Calculating Discount Savings

Savings Formula

Discount Amount = Original Price × Discount %
Tax Savings = Discount Amount × Tax Rate
Total Savings = Discount Amount + Tax Savings

Example Calculation

Original Price: $1,000
Discount: 20%
Tax Rate: 15%

Discount Amount: $1,000 × 20% = $200
Tax Savings: $200 × 15% = $30
Total Savings: $230

Final price: $920 (instead of $1,150)

Communicating Savings to Clients

Highlight savings in invoice notes:

“As a valued client, you’ve saved $230 on this invoice with your 20% loyalty discount. Thank you for your continued business!”

Troubleshooting

Discount Not Applying

Solutions:

  1. Ensure you entered number only (not “%”)
  2. Check discount is between 0-100
  3. Save the line item after entering discount
  4. Refresh page if calculation seems stuck

Discount Shows Wrong Amount

Solutions:

  1. Verify base amount (unit price × quantity)
  2. Check for rounding differences
  3. Ensure discount percentage is correct
  4. Recalculate manually to verify

Tax Calculated on Original Price

Solutions:

  1. This shouldn’t happen (discounts apply before tax)
  2. Check tax settings (should be tax-exclusive)
  3. Try creating new revision
  4. Contact support if issue persists

Discount Not Syncing to Xero

Solutions:

  1. Ensure discount is percentage (Xero doesn’t support fixed amount discounts)
  2. Check discount is in valid range (0-100%)
  3. Try re-posting to Xero
  4. Check Xero error log for details

Common Questions

Can I apply a fixed dollar discount?

Not directly. LiteWork uses percentage discounts. Workaround: Calculate percentage equivalent. Example: $100 off $1,000 = 10% discount.

Can I discount the entire invoice at once?

Not built-in. Apply same discount to all line items, or add negative line item for total discount. See “Invoice-Level Discounts” section above.

Will discounts affect my accounting reports?

Yes. Discounted amounts are what’s recorded as income. Original prices aren’t tracked separately. If you need to track discounts for analysis, add notes or use tags.

Can I set a maximum discount limit?

Not enforced by system. You can manually limit discounts to your policy (e.g., max 20%). For team collaboration, document discount policies in your workflow.

How do I remove a discount?

Edit the line item and set discount to 0 or delete the discount value entirely.

What’s Next?

Optimize your invoicing:

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