Cotermination Calculations
When multiple lines are coterminated, a formula is applied for calculating the price.
Renewal price
The renewal price is calculated based on the cost per day in the original active term that is multiplied by the number of days in the new active term. Optionally, you can also multiply it by an uplift factor to apply a discount or price increase.
- Formula
- Renewal price = Cost per day in the old active term X Number of days in the new term X Uplift factor
- where
- Original active term = Term end date - Term start date
- New active term = Date on which the original active term ends until the term end date
Example
A line that you want to coterminate has some of the following terms.
| Term | Value |
|---|---|
| Original start date | 09/01/2004 |
| Original end date | 02/28/2005 |
| Required cotermination date | 12/31/2005 |
| Original active term price | $6000 (Then current pricing) |
| Uplift factor | 1.1 (for 10%) |
The following values are calculated based on Table 1.
| Term | Value |
|---|---|
| New term start date | 03/01/2005 |
| New term end date | 12/31/2005 |
| New number of days | 31 + 30 + 31 + 30 + 31 + 31 + 30 + 31 + 30 + 31 = 306 |
| Original number of days | 30 + 31 + 30 + 31 + 31 + 28 = 181 |
| Price for new active term (original term price that is uplifted and prorated to new term) | 6000 × 1.1 × (306 /181 Days) = $11,158.01 |
You can also have custom calculations that are set up in your system. For more information, contact your Emptoris representative.