The following provides an overview of the pricing and discount capabilities in the system. It also serves as an introduction to the pricing-related documents. See Related topics.
Note: A more technical description, outlining the actual calculation process and behind-the-scenes retrieval is outlined in Understanding sales pricing (Technical reference).
The design
The design of the sales pricing functionality has an open architecture that is completely user definable.
You can:
- Either, have the system automatically retrieve the price and any applicable discounts
- Or, enter them manually during sales order line/quotation line entry.
If you want the system to retrieve the price and discounts, the pricing information can be set up on a simple level to a very complex, yet flexible level. It all depends on your needs.
Pricing and discount capabilities
The system offers the following pricing and discount capabilities. Any combination is possible.
| Pricing | Discounts |
|---|---|
| Customer pricing | Limit dependent discounts |
| Short term pricing | Line discounts |
| Best price | Header discounts |
| Customer structure pricing | Order line summary discounts |
| Fixed price | Chain discounts |
| Limit dependent prices – individually set prices that are defined per item and unit combination against a quantity limit. | Basket discounts – Apply order line summary discounts and/or header discounts on a group of item related elements (e.g., item group, item price code, item category). Set a minimum quantity and/or value that must be reached in order for the basket discounts to be applied on a sales order. It’s an easy way to apply discounts on a wider range of items. |
| FOC | Claimable discounts. The Supplier Marketing Support (SMS) application provides the functionality that allows your company to claim rebates from your suppliers/manufacturers. The rebate claims can be derived from a cost or a customer discount.
If you want to claim any of the discounts you set up, the SMS application must be activated. A flag for Claimable will be then displayed where applicable. Set this flag to True. See Setting up the SMS functionality and Process handling in the SMS application for instructions on setting up the functionality and claiming the discounts. |
| Promotions | Cash discounts should the customer pay the invoice on time. |
| Margin | Additional discounts |
| Mark-up | |
| Cost bases | |
| Retail pricing |
Storage of prices
If you want the system to retrieve the price and any discounts during sales order line/quotation line entry you have to set up your pricing information.
There are three ways to hold sales prices, discounts and FOC in the system. You can choose to set up and utilise all three or just those which are applicable.
- Sales price lists – a repository of sales prices that can be set up according to your needs. They can be applied in the following ways:
- At Iptor.com company level – mandatory.
- Per item, unit and currency combination
- Per customer
- Customer contracts – typically used when you have negotiated prices and discounts with your customer for a specific period of time.
- Sales pricing methods – very flexible way of defining prices and discounts – aided by linking sales related keys (customer, item and/or order related). There are five different method types that can be set up, each serving a different purpose. By attaching the sales related keys (table records and their values) to each method, you can narrow down or broaden the scope of the actual application of prices and discounts.
Types of prices
Sales prices can be described as falling into the following categories:
- Fixed sales prices – these, as the name implies, are individually set prices that are defined per item and unit combination.
- Limit dependent prices – these are individually set prices that are defined per item and unit combination against a quantity limit or against a matrix quantity (the accumulated order quantity for all lines with matrix items holding the same segment 1 value) limit. These are fixed prices but are stored against a quantity limit for a customer contract or sales pricing method. In addition, when you uniquely define a quantity limit for a price list item that will result in a price.
- Variable prices. See Variable sales prices below
- FOC
- Retail prices – generated from a variable or a fixed price in a sales price list, customer contract and/or sales pricing method.
Variable sales prices
Variable sales prices are based on the cost, or purchase price of the item and can be calculated by defining a:
- Mark-up factor
- Mark-up percentage
- Margin factor
- Margin percentage
You can select the base cost, defined at either the item level, warehouse level or on the purchase or retail prices. The resulting sales price can be derived from any of the following:
| Item level | Warehouse level | Purchase price | Retail price | Price list |
|---|---|---|---|---|
| Average Cost
Standard Cost Last Purchase Cost |
Average Cost
Last Purchase Cost Standard Cost |
Purchase Price 1
Purchase Price 2 Purchase Price 3 Purchase Price 4 Purchase Price 5 |
Retail Price
Only used in customer contracts and sales pricing methods. |
Price list
Only used in customer contracts and sales pricing methods. |
Note: The ability to base the sales prices on costs at both item and warehouse level is irrespective of how the Cost per warehouse field is set in the DIS control file.
The system will automatically calculate the sales price according to the calculation method that you selected in the Sales price list, Customer contract and/or Sales pricing method using the following formulae:
| Calculation method | Formula |
|---|---|
| Mark-up percentage | Base cost x ((100 + %) / 100) = Sales price |
| Mark-up factor | Base cost x (1 + Factor) = Sales price |
| Margin percentage | Base cost / ((100 – %) / 100) = Sales price |
| Margin factor | Base cost / (1 – Factor) = Sales price |
Base cost value
As described in the above sub-section, the base cost of the item can be defined at either item or warehouse level or can be based on the purchase or retail price of the item.
The following table details all of the permutations that can be used to calculate the sales price.
| Cost bases Can be any of these values |
Pricing alternative Can be any of these values |
|
| Average Cost/Item Standard Cost/Item Last Purchase Cost Item Purchase Price 1 Purchase Price 2 Purchase Price 3 Purchase Price 4 Purchase Price 5 Retail Price Average Cost/Warehouse Last Purchase Cost/Warehouse Standard Cost/Warehouse Price List for customer contracts and sales pricing methods |
Mark-up factor
Mark-up percentage Margin factor Margin percentage |
= Sales price |
Regardless of whether you are defining a sales price list, customer contract or sales pricing method you select the cost base that you wish to apply in your sales price calculation in the same way. See Variable sales prices for the settings that must be defined in the system to be able to apply variable pricing.
Types of discounts
Discounts can be applied on sales order line level or sales order header level.
The following types of discounts can be set up/defined and automatically applied:
(Note: Discounts can also be manually entered during sales order entry, on line and/or header level. See Manually add a discount to a sales order line, Retain/apply a manually added discount on future sales order lines and Manually add a discount to a sales order header for instructions.)
| Types of discounts | Definition | Set-up options | Links to more information |
|---|---|---|---|
| Limit dependent discounts | Discounts based on a quantity limit, a matrix quantity limit or an amount limit.
For quantity dependent discounts, the discount can be set up as a discount percentage or a discount amount. For matrix quantity dependent discounts (the accumulated order quantity for all lines with matrix items holding the same segment 1 value), the discount can be set up as a discount percentage, discount amount or FOC items. For amount dependent discounts, the discount can be set up as a discount percentage or a discount amount. |
Two choices:
|
About setting up limit dependent pricing |
| Discount amount or percentage | Discounts NOT based on or restricted by any limit | Uniquely define these discounts per item in a Sales price list and/or Customer contract and/or Sales pricing method | |
| Chain discounts | Discount can be a percentage or amount and can be limit dependent.
These discounts are applied on top of any discounts that may have been generated by Sales pricing methods of type Normal, Sales price list and/or Customer contract if these are defined for Chain discounts. If they are not defined for Chain discounts, none will be applied on top. |
The discount itself is set up as a Sales pricing method, classified as type C (Chain discount). | Set up a chain discount method and define the discounting |
| Order summary discounts | Discount itself can be a percentage or amount and can be limit dependent.
You can apply these discounts to any other Sales pricing method and/or Sales price list and/or Customer contract that are defined for order summary discounts. If they aren’t defined for order summary discounts none will applied. |
These discounts are set up as a Sales pricing method, classified as the following types:
O (Order line summary) H (Header discount). |
Set up an order line summary discount method and define the discounting
and |
| Basket discounting | O and H pricing method discounts can be set up using baskets.
The definition of a basket is a group of item related elements (item, item group, etc) that together form an entity upon which Order summary discounts can be applied. |
You create the baskets in the Work with baskets file and define the qualifying quantities and values that must be ordered for the basket to become effective for discounting. You then link the basket as a key in the Sales pricing methods file for O and H pricing methods and define the discounting rules there as well. | About setting up baskets for basket discounting
and |
| Cash discounts
Note: These discounts are not part of the line and header discount calculations. They are calculated and applied during invoicing. |
Cash discounts can be given to a customer if they pay the invoice within a designated period of time. Any cash discount incentives are printed on the invoice.
The basis for the cash discount calculation can be the invoice net amount or the gross amount. Surcharges are not included in the calculation. |
You define how they should be deducted in the DIS control file, in the Cash discount deduct field (i.e. from net or gross amount)
You define the cash discount percentages and what they should be based on in the Terms of payment table. |
Define sales price control parameters
and |
All applied discounts on a sales order can be printed on any external document. See Printing discounts for the choices you have and how to set the system up to print/not print them.
Retrieving order line price
If you do not manually enter a price during Sales order entry and/or Quotation line entry, the system retrieves the price according to the sequence defined for Contract, Price List and Pricing method in the DIS control file.
What price the system retrieves depends on what has been set up together with some controlling parameters. See Define sales price control parameters for that information.
The sales price and discounts retrieval is controlled by the following two main routines:
| Routine | Processing |
|---|---|
| Sales price and discounts calculation | This routine retrieves the price and discounts for a single line. First a base price is retrieved. Then the sales price is retrieved from the main pricing sources Customer contracts, Sales price lists, Normal methods or Promotional methods (the base price is used if a customer contract or a Method is encountered that only holds discounts). Any discounts set up for the same main source is then applied. Lastly, chain discounts are applied if that is applicable for the main source (controlled with a flag on the main source).
If the item being priced is a matrix item, and no sales price is found, the pricing retrieval will be repeated for the matrix base item from which the matrix item originates. The outcome of this pricing of the line will control if the line will get any order summary discounts (O- and H-type method). If either the main pricing source or any of the applied chain discounts is flagged with Order summary discounts set to False then no order summary discounts will later be added to this line. |
| Calculate order summary discount | This routine calculates and applies discounts based upon the summary of the whole order. This is performed at order close or when requested by the user. It will first apply Order line summary discount (O-type methods) at order line level. It will then apply Header discounts (H-type methods) that are stored at order header level with the apportioned amount that can also be seen at line level. |