Costing Models for Sales Prices

This supporting function is used to enter a costing model in order to calculate sales prices. Costing elements and rates are included in the costing model.

At the end of this document you will find a detailed example of how costing models are constructed.

Before you start

Currency codes must be specified.

Follow these steps

  1. Enter Costing Elements

    Costing elements are used in a costing models to calculate markups or markdowns on a basic price in a costing model. They are entered in 'Sales Costing Element. Open' (OIS015).

    Costing elements must be defined with a costing element type, which controls if the costing element calculates markups or markdowns.

    • Basic Price Elements

      Basic price elements are used to calculate the basic price in the sales price list or to calculate the sales price during customer order line entry when price origin C (online calculation) is used. These might be environmental fees, commissions or contribution margins that will be included in the calculation of the basic price. The keys that can be used to adjust these rates are completely regulated by the item.

    • Order-dependent Costing Elements

      Order-dependent costing elements are used to add more costs to the price list's basic price to calculate the sales price during customer order line entry. They are also used for price origin C.

      Since these elements are calculated during customer order entry, fields used in the customer file and in customer order line entry can be used as keys. For example, it is possible to let the costs be dependent on the customer order type, delivery method or terms of delivery.

      For example, an order-dependent element can be used to calculate freight costs per kilogram to be included in the price. Since this information depends on the ordered quantity, the price cannot be calculated before an order line is entered.

    • Operator

      Operator defines how costing element markups or markdowns are to be calculated.

      There are two types of operators:

      • Operators for displaying subtotals and totals
      • Operators for calculations.

      Operators for totals are used to facilitate simulating sales prices. Operator 00 can be used to display subtotals in the costing model's calculations, and operator 99 shows the sales price calculated for the price list.

      Operators for calculations regulate how the costing element is calculated within the costing model. For a complete description of all operators, see 'Sales Costing Operator. Select' (OIS036).

    • Key Fields

      Predefined key fields can be used to adjust the markup or markdown depending on the selection criteria.

      For example, an item group can be entered as a key field. Different markups or markdowns can then be calculated depending on the item group an item belongs to. For a complete description of all key fields, see 'Field Group. Display Permitted Fields' (CRS109).

      It is optional to use key fields. Leaving the key fields blank mean that the markup/markdown is always applied, unless the key fields for exclusions are used. The key fields for exclusion can be used independent on the key fields for inclusion. The exclusion key fields make it possible to define selection criteria for excluding the markup/markdown.

  2. Enter Costing Rates

    Costing rates are entered in 'Sales Costing Element. Connect Rates' (OIS019), which is accessed by selecting option 12 = Rates in program 'Sales Costing Element. Open' (OIS015).

    These rates are used to calculate a percent markup/markdown for the items. The markup/markdown is calculated on the costing model's calculation base. Different rates can be entered by entering different values for the fields in 'Sales Costing Element. Open' (OIS015/E). See the example later on in this document.

    The key field &SAPR is used for adding a markup/markdown based on the sales price. The entered sales price is the lower limit for the markup, which means that a line for the last upper limit must be entered with a markup of 0%. See the example later on in this document

  3. Enter Exclusions

    Exclusions are entered in 'Sales Costing Element. Exclusions' (OIS027), which is accessed by selecting option 13 = Exclusions in program 'Sales Costing Element. Open' (OIS015). Here you select from a drop down box which of the five available exclusion fields to work with. There is no detailed panel. Just create a record for the control object that should be excluded from the markup/markdown

  4. Enter Costing Model

    Costing models are entered in 'Sales Costing Model. Open' (OIS022).

    • Calculation Base

      The calculation base used to calculate the sales price is specified for the costing model. This base is the starting point for the additional sales price calculations made using the different costing elements in the costing model.

      Six predefined calculation bases are available. It is also possible to use the sales price from another price list as the base for the calculations.

    • Costing Element for a Costing Model

      A costing model is created by selecting costing elements and placing them in a certain order. The elements are connected to a costing model in 'Sales Costing Model. Open Lines' (OIS023).

      'Sales Costing Model. Open' (OIS022) starts 'Sales Costing Model. Open Lines' (OIS023) via option 11, where the costing elements used for calculating the base price in the price list are entered. 'Sales Costing Model. Open Lines' (OIS023) is started via option 12. This is where the costing elements used to calculate the order-dependent sales price are entered.

  5. Simulate and Check Costing Model

    The costing model for an item can be checked in 'Sales Price. Simulate' (OIS325).

    By simulating the sales price, it is possible to change the purchase price, rates in the sales price costing, etc. to see how changes affect the sales price.

Examples

This example shows how to define the rates when key field &SAPR is used:

Price Range Markup
$ 0 – $ 4.99 10%
5 – $ 9.99 5%

Setup in 'Sales Costing Element. Connect Rates' (OIS019),:

Sales price Markup
  10%
5 5%
10 0%

This example shows how a costing model is used:

Element Name Key 1 Key 2 Operator Element type
A1 Contr margin MMITGR   05 1
A2 Basic price     99 1
B1 Freight OATEDL OAMODL 07 2
B2 CIF price     00 2

In this costing model two basic price elements are used: A1 and A2. The basic price element has element type 1, meaning that the element should be included in the basic price. Contribution margin A1 uses operator 05, meaning that the contribution margin is calculated as a percent of the calculation total including the previous line. In the example, MMITGR (item group) is selected as the key. This means that different contribution margins can be used for different items, depending on the item group.

Basic price A2 has operator 99. This operator indicates which line in the costing is the price list's basic price.

In addition to the basic price element, two order-dependent costing elements, B1 and B2, are used. These elements have element type 2, meaning that the element should be calculated when pricing an order line. The freight cost is therefore added to the sales price for each order line entered. B1 uses operator 07, meaning that the freight cost is considered as a price per weight unit (gross weight) from the item. B1 has keys OATEDL and OAMODL (delivery method). This means that different freight costs can be calculated depending on the terms of delivery and the district.

B2 uses operator 00, meaning that the element is used to display the final sales price for different scenarios in the simulation.

The table below shows the costing rates for element B1 according to the above conditions.

Terms of del. District From Rate Currency Priceqty.
CIF AIR 970101 143.90 USD 1000
CIF SURFACE 970601 0.95 USD 1

According to the table, key 1 is terms of delivery and key 2 delivery method.

The table shows that USD 143.90 is charged per 1,000 weight units for CIF deliveries (Cost, Insurance and Freight) using delivery method AIR. This takes effect on 970101.

CIF deliveries using delivery method SURFACE will be charged USD 0.95 per weight unit starting 970601.

Freight is not included in the price list's basic price. Instead, it is added to the sales price during order line entry.

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