This topic explains some basic pricing concepts and terms that all salespeople and managers should be familiar with.
Customers are categorized by price class and customer type.
Grouping your customers by price class lets you give your best customers your best prices. These customers can be grouped together in a price class, such as class 4, that gives them the best everyday pricing.
Grouping your customers by customer type lets you offer promotional pricing to certain types of customers. Some examples of customer types include large contractor, small contractor, electrical, industrial, and retail. Using the customer type, you can give all electrical customers a discount this month on certain products.
Your company's pricing manager uses the Customer Pricing/Printing screen to specify a customer's type and default price class.
Categorize products by sell groups in order to apply similar pricing to similar products. Product sell groups can include all products in a price line, or part of a price line. In the Sylvania price line, for example, the Sylvania miniature lamps might be one sell group, and the basic Sylvania flourescent lamps another. Your pricing manager uses the Price Group Maintenance screen to include a product in a sell group.
Selling prices are determined by a sell matrix. As shown in the example below, a sell matrix is made up of rows, columns, and cells, like a spreadsheet.
The columns across the top show the customer categories, such as customer price class, customer type, or a specific customer. The rows down the side show the product categories, such as sell group or individual product.
A pricing formula is specified for each cell in the matrix. The formula is used to calculate the selling price. For example, you can multiply a product's replacement cost by a certain amount.
The system determines a customer's selling price by using the formula in the cell where the categories for the customer and the product intersect. In our example, a Class 2 customer buying cool white lamps gets a price of replacement cost multiplied by 1.9. A Class 3 customer buying the same product pays slightly less.
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Customer |
Customer |
Customer |
Customer |
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SYL-MIN
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REP-COST |
REP-COST |
REP-COST |
REP-COST |
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SYL-FLR
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REP-COST |
REP-COST |
REP-COST |
REP-COST |
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SYL-COOL |
REP-COST |
REP-COST |
REP-COST |
REP-COST |
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Sample Sell Matrix |
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Your pricing manager creates matrix cells using the Quick Sell Matrix Maintenance screen or the Sell Matrix Maintenance screen. In most cases, you can use the Quick Sell Maintenance screen, unless a cell has special requirements, such as quantity breaks.
The vendor's prices and costs are maintained on the Product Price Sheet Maintenance screen. The matrix cell formulas use those amounts in the price calculations.
Each matrix cell has a date when its pricing formula becomes effective, and another date when it expires. This lets the cell coincide with a vendor's price sheet that is good for a specified period of time. If two cells have overlapping dates, the system uses the cell whose start date is closest to the order's price date.
You can force an order to use a price date you specify by entering a different date on the Pricing Override screen. By default, the current date is shown, but if you enter a new date, the system uses the appropriate pricing from that date.
You can change prices in a number of ways, such as using manual price overrides or changing prices using calculations in numeric fields. You can also apply special pricing using automated features, such as applying quote pricing or contract pricing.
Quote pricing is used for special pricing on one or more products. A quote is in effect for a limited time period, and can be offered to one or more customers. Managers create quotes on the Quote Maintenance screen. In most cases, your customer is required to ask for the quote pricing. To activate quote pricing, enter the quote name in the Quote field on the Pricing Override screen.
Contract pricing lets managers link additional customers to another customer's pricing. In practice, distributors often create a model customer with the appropriate pricing, then link other customers to the model customer's record. Once linked, the contract prices are used — except when the other customers' prices are better. Specify which model customer to use on the additional customers' Contract Pricing screen.
Another way to apply special pricing is by using the Best Price Chk (Y/N) field on the Sell Matrix screen. If a manager enables this for a cell, the system also looks at the other cells in the pricing hierarchy. The system uses the best price it finds.
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