This document provides an overview of how discounts and surcharges can be applied in SAP IS-U. Discounts and surcharges can refer to quantity, price, or amount, and can be applied flexibly through rates or individually in contracts. Absolute discounts require a unit of measurement and reference base, and restrict these discounts to registers only. The document demonstrates examples of discounts applied at the rate level and installation rate step level to reduce amounts for customers.

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Study of Discounts-I
This is just a basic overview of discounts/surcharges. ☺ Have posted some text from help.sap.
feel free to browse from there too.
http://help.sap.com/erp2005_ehp_06/helpdata/en/48/8eb1fe0c2611d2897f0000e828485b/content.ht
m?frameset=/en/45/556a3591541f67e10000009b38f889/frameset.htm
In IS-U we use discounts and surcharges (both percentage and absolute) for giving rebate.
Discounts and surcharges can refer to a quantity, a price or an amount. We can grant
discounts or levy surcharges flexibly; they can be applied to several contracts (through a rate)
or structured individually in the case of individual contracts (during full installation, but there
is a catch here).
We must enter a unit of measurement for absolute discounts with the reference
base quantity or demand. This restricts these discounts – both absolute values and percentage
rates – to registers (this is the catch). In contrast, discounts with the reference
base amount or price cannot be used for registers. For absolute discounts you must define the
time reference with the reference base Amount and Quantity.
So below is a discount with Amount reference base and Absolute value discount type. The
discount given is $10.
Another discount with Quantity reference base and absolute value discount type is
also created with quantity discounted as 10 units.

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Now executing the rate with discount variant for amount discounts DISCNT08 we can
see below that for a consumption of 31 units, $10 plus tax (cause of the disparity
between scheduling period and billed period this becomes $ 10.19) is the amount
discount.
With the price per unit been $1, so the net amount comes down to $31 -$10.19 =
$20.81.
As has already been mentioned quantity and demand discounts/surcharges can be
used during full installation for individual installations/contracts. The above example

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was working at the rate level. Now let’s have some discount component at the
installation rate step level. So during full installation (EG31) we need to have this field
filled as shown below. We can have quantity or demand discount as this works on the
register level.
Now executing the rate with discount variant for amount discounts DISCNT08 we can
see below that for a consumption of 20.81 units, with 10.19 units deducted cause of
the quantity discount given at the full installation level. So instead of billing for
31units we have already discounted the consumption.
$10 plus tax (cause of the disparity between scheduling period and billed period this
becomes $ 10.19) is the amount discount. With the price per unit been $1, so the net
amount comes down to $20.81 -$10.19 = $10.62.
We could have included variant DISCNT01 in the rate steps and still got the same
amount but then that would have been valid for all the contracts assigned to that rate
until and unless we start using if-else and make the rate more complex to do this
selection. ☺
In summary what was done here is that using the option of giving discounts at the full
installation level which works for only registers(only quantity and demand discounts
would work) we can give this benefit on the consumption level to the customers. Also
been a primer the intention was just to show discount at work, probably in future post
would be giving an overview of other discount variants. ☺