Pricing using multiple currencies
Multiple currency pricing is controlled by the way in which you set up the billing company. When you price items in multiple currencies and your company is set up that way, you have several options.
If you do not want to price in multiple currencies, all of your pricing setup happens in the base currency for the company. The only requirement is a conversion from one currency to another based on the base currency for the customer.
If you choose to price in multiple currencies, your pricing definition requires certain pricing parameters, or price bases, that are stored in different currencies.
Currency-based pricing
If your company uses multiple currency pricing, then you can use the currency-based pricing method.
Currency-based pricing is used to price an item according to the currency in which the customer orders. Because the price is based on the currency exchange rate, the price is subject to exchange rate fluctuations.
You assign a price base to each currency in which customers can order their items. To calculate the customer price, you must decide whether to calculate the price base in your base currency or in the order currency. You must make this decision at the company level. To calculate the customer price in the order currency, you must select currency-based pricing.
These examples show how your multiple currency pricing decisions and the currency-based pricing method affect the outcome of your pricing strategy:
| Example | Multiple Currency field | Currency-based pricing field |
|---|---|---|
| 1 | No | No |
| 2 | Yes | Yes |
| 3 | Yes | No |
Example 1
You and your customers share the same currency. No multiple currency issues or requirements exist.
Example 2
Your company has clients in the United States, France, and Germany. You process invoices in other currencies. Dollars and Euros have unique price bases assigned to them.
This situation implies that at least some of the items that you sell are stocked in warehouses in different countries. It also implies that the sell price of these items is based on your cost in the local currency.
In this situation, you must establish base prices for these items in multiple currencies.
| Item | Price base name | Price base | Price list |
|---|---|---|---|
| FR-44PE | US Dollar | $10.00 | 90% |
| EURO | EUR 10.00 | 90% |
A customer in France orders 10 FR-44PE items. The pricing details are:
- Price base that is assigned for francs is EUR 10 for each FR-44PE item.
- Order total is 100 Euro (10 * EUR 10).
- Price list for this customer is a 10 percent discount off of the base. So the final price that is printed on the invoice is 90 Euro (EUR 100 * 90 percent).
The price is converted from Euro to your base currency before sending transaction data to the global ledger.
Example 3
You process invoices in multiple currencies but do not want currency-based pricing. Several clients are based in other countries. Prices do not vary based on the market. Because prices are stable, do not define a base for each currency that is used.
A French customer orders 10 FR-44PE items. The currency that is assigned to this customer is Euro, so the order total is $100.00 (10 * $10.00). The price is calculated in your base currency and does not convert it to Euro until the order is created or items are re-priced. Then the base currency total is multiplied by the currency exchange rate and the total is printed in Euro on the invoice.
The base currency amount is stored and transaction data is sent to Global Ledger.