Sales Price Administration

Description

Sales price is the price paid by the customer per sales price unit of measure and sales price quantity. This price per item can be entered in for example, the item file or a price list. During customer order entry, the sales price is automatically retrieved according to a specified order of priority. This price can be manually changed for each order line if allowed by the customer order type.

Before you start

The process can be started when the following prerequisites are met:

• Items are entered.
• Currency codes are entered. Here it is also possible to define the number of decimals to use for sales prices if the currency’s regular number of decimals should not be used.
• To calculate a price list using a costing model, it must be defined in 'Sales Costing Model. Open' (OIS022).
• To calculate graduated prices automatically, scales for this purpose must be defined in 'Sales Price List. Connect Price Scale' (OIS026).

Follow these steps

The section below describes the activities in this process.

1. Define Costing Model

   To calculate a price list, it must first be connected to a costing model. Costing models describe how prices are calculated by using markups or markdowns.

   A calculation base is entered for each costing model. Examples are the sales price from the item file or the purchase price. The markups and markdowns are calculated from the selected calculation base.

   The costing model is entered in 'Sales Costing Model. Open' (OIS022) and then connected to a price list in 'Sales Price List. Open' (OIS017/G).

   When prices for items in a price list are to be calculated, the values are retrieved from the calculation base. The values from the base are then adjusted with the markups or markdowns defined for the model in 'Sales Costing Model. Open Lines' (OIS023).

2. Define Sales Price List

   Sales price lists are entered in 'Sales Price List. Open' (OIS017). Unique IDs for the price lists are made up of a combination of price list code, currency code and start date.

   • Price Changes and Campaigns

     The validity date (start and end dates) of the price list can be used to plan price changes and time-limited sales campaigns in advance. This is done by defining a price list using different periods for a combination of price list code and currency.

     By specifying a campaign for a price list or selection of items, different campaigns can be followed up in the sales statistics.

   • Discount Relations and Bonus Agreements

     In most cases, the sales price is only one of the factors determining how much a customer will pay for an item. Other factors affecting the price include discounts and bonus agreements. Each price list indicates whether these factors should be included in the calculation of the sales price.

     However, it is possible to make exceptions for each item included in the price list.

   • Price Lists for a Limited Selection of Items

     If a price list should contain only a limited selection of items, the selection is made on the F panel in 'Sales Price List. Open' (OIS017).

     On the E panel in 'Sales Price List. Open' (OIS017), the security level for the price list is defined. This level determines whether it is permitted to enter items not included in the price list's specified item selection.

     There are three security levels:

     • Items outside the selection may be entered.
     • Items outside the selection may be entered, but a warning is issued.
     • Items outside the selection may not be entered.

     When a price list is calculated/updated in 'Sales Price List. Update' (OIS310), it is shown how the item selection was made. The selection can be limited even further to include the items to update.

   • Automatic Price List Updates

     In the 'Manual update' field in 'Sales Price List. Open' (OIS017/E) it is indicated whether sales prices may be changed manually for items included in a price list. Note that the value entered in the 'Sls price rule' field in 'CO Type. Open' (OIS010/I) overrides the value entered in panel 'Sales Price List. Open' (OIS017/E).

     If the price list is blocked for manual changes, it must be calculated using a sales price costing. When this calculation is requested by specifying option 16 = Price list update, the update alternative is selected in the 'Function sel' field in 'Sales Price List. Update' (OIS310/E). You can choose to

     • add new items with prices to the price list,
     • recalculate prices for existing items or
     • delete items from the price list.

     The price list is later recalculated and updated according to the selection. See the description of linked price lists below.

   • Link Price Lists

     One or more price lists can be connected to another price list (basic price list). In this way, several active price lists can be used at the same time. For example, a general price list can be the base for several lower-level price lists that deal with different market segments or regions.

     A price list is connected to a basic price list by entering it in the 'Basic prc list' field in 'Sales Price List. Open' (OIS017/G) for the price list to be connected. The result is that the linked price list uses the basic price list's items and prices as the basis for calculating sales prices.

     In order for the linked price list to be affected by the basic price list, it must be connected to a costing model with calculation base 6 (Basic price according to another price list).

     If the 'Auto calc' field is activated for the linked price list in 'Sales Price List. Open' (OIS017/G), the linked price list can be updated automatically when the basic price list is updated. This is done by specifying an alternative for automatic updating in the 'Function sel' field in 'CO Charge. Open' (OIS030/E) when updating the basic price list. If several price lists are connected to the basic price list, these are displayed and the price lists to be updated can be selected.

   • Graduated Price List

     Scales are used to calculate quantity-dependent sales prices. The scale indicates how a price changes depending on the quantity entered during order line entry.

     The scale is creating by entering ascending limit values. Each limit has a price adjustment factor. This factor is a percentage that is multiplied by the item's basic price. Therefore, when the basic price for an item is changed, the scale does not need to be updated or changed.

     Scales are entered and updated in 'Sales Price Scale. Open' (OIS024). They are general and can be used by different items and price lists at the same time.

   • Connect Scale to Price List

     To connect a scale to a price list, at least one key for scale factors must be entered in panel 'Sales Price List. Open' (OIS017/E).

     A key is a field that acts as a general selection key in order to qualify a scale for a price list. One or more values are then entered for the key, and are specific for that key. For example, if item group is used as the key, different item group identities can be entered as values.

     After a key is entered, a heading is displayed for the field selected as the key in 'Sales Price List. Connect Price Scale' (OIS026). This program is accessed by specifying option 12 = Scale keys in 'Sales Price List. Open' (OIS017).

     When a value is entered for a key in program 'Sales Price List. Connect Price Scale' (OIS026), the scale to use if an item matches the selection key is also specified. See the example below.

     Note that each scale is defined for both a scale U/M and a price U/M. Therefore, the item's price U/M in a price list must correspond to the price U/M for which the scale is entered.

     When items and prices are automatically generated in a price list, the scale's price U/M is used if it is valid for the item. If it is not valid, the scale will not be used. Instead, the price U/M and the price quantity will be retrieved from the item file.

     Example

     A company uses different scales for different item groups. Group 1 uses Scale 1, and Group 2 uses Scale 2. MMITGR (item group) is then entered as a key in the Key field in 'Sales Price List. Open' (OIS017/E).

     In 'Sales Price List. Connect Price Scale' (OIS026/B), Group 1 is entered as a value. In panel 'Sales Price List. Connect Price Scale' (OIS026/E), it is specified that Scale 1 should be used for item group Group 1. Group 2 is then entered as a value in 'Sales Price List. Connect Price Scale' (OIS026/B) and Scale 2 in 'Sales Price List. Connect Price Scale' (OIS026/E).

     Result: Scale 1 will be used to calculate the sales price for all the items in the price list belonging to item group Group 1. All items belonging to Group 2 will be calculated according to Scale 2.

   • Price Rounding

     A round-off category can be specified for each price list in 'Sales Price List. Open' (OIS017/E). This defines how prices are to be rounded off.

     Note that both the basic price and graduated prices are rounded off according to the specified category. However, a basic price that is not rounded off is used to calculate prices according to the scale.

   • Manual Updates of Prices

     The basic price per item can be updated for each price list in 'Sales Price List. Open Basic' (OIS021). This program is accessed by specifying option 11=Basic prices in 'Sales Price List. Open' (OIS017).

     In 'Sales Price List. Open Basic' (OIS021), the price calculated for an item in a price list can be changed. Information such as U/M, quantity and scale U/M can also be entered or changed.

     If no scale is used for the price list, graduated prices can be entered for an item in 'Sales Price List. Enter Graduated Prices' (OIS018). This program is accessed by specifying option 11=Grad prices from program 'Sales Price List. Open Basic' (OIS021).

     Prices can also be updated manually in 'Sales Price. Simulate' (OIS325). The simulation result is proposed as the basic price. This proposal can be changed before an update is made.

3. Simulate Costing Model

   The main purpose of simulating item prices is to check that a costing functions correctly. The simulation is made for an item in a price list according to a specified costing model.

   The sales price for an item is calculated from a specified costing base, with markups/markdowns according to the selected costing model.

   • Price List and Costing Model Relationship

     The figure below illustrates the relationship between the information in the price list and the costing model used.

     

4. Costing Structure

   The figure below illustrates how the sales price costing is structured.

   

   A costing model contains a costing base and costing element. The costing elements can either be type 1 elements (for calculating the basic price) or type 2 elements (order-dependent elements for calculating markups or markdowns during customer order entry). Type 2 elements do not affect the calculation of prices in the price list.

   • Costing Base

     When the sales price is simulated for an item, the costing model to use is specified.

     When a costing model is retrieved from the price list or entered in the 'Costing model' field, the model's costing base is retrieved and displayed in the 'Base' field. The costing base is used to retrieved the starting price to use in the simulation. In this way the same price costing can be used in different price lists even if the base itself varies. Examples of a costing base are the sales price in the item file or the purchase price.

     If a price list uses a sales price costing based on a purchase costing (costing base 4), a purchase costing must be entered for the price list in (OIS017/G).

   • Simulate Basic Price

     The main purpose of price simulation is to calculate a basic price for an item, in other words a price in the price list. Through changing the costing model or costing rates, different results can be obtained.

     The available costing elements are listed in 'Sales Price. Simulate' (OIS325), and can be obtained via F4 = Browse.

   • Simulate Final Sales Price

     When simulating the sales price, it is possible to take into account order-dependent costing elements. This is done by changing the values for the fields entered for the order-dependent element's keys. In this way, it is also possible to simulate the markups or markdowns that are normally first calculated when entering an order line.

     Order-dependent costing elements are used to mark up/down the price list's basic price during customer order entry. For example, such an element can be used to vary freight costs depending on the ordered quantity, method of transportation, country, etc.

   • Simulate using Purchase Costing as Base

     If a costing model uses a purchase costing as a base, the purchase costing can be displayed. By doing this, the calculation can be followed from the purchase price up to the final sales price.

     Different scenarios can be simulated by varying information such as supplier, purchase price, discounts, order quantities, etc.

   • Simulate using Another Sales Price List as Base

     If a costing model has another price list as a base, the sales price can be simulated in these two ways:

     • The costing is based on the current price in another price list.
     • Even the price for the base is simulated. If there is no price costing for the base, the current price is used.

     Example

     If price list 2 uses price list 1 as the base, and price list 1 is based on a cost price according to the purchase costing, the total calculation for price list 2 is displayed as follows:

     • Purchase costing for calculation of the cost price
     • Sales price costing for calculation of the price in price list 1
     • Sales price costing for calculation of the price in price list 2
     • Calculation of simulated final sales price

5. Update Sales Prices

   Sales prices for items included in a sales price list can be updated in four ways:

   • Through manual entry per item number
   • Through updating the simulated result per item number
   • Through updating parts of a price list or the entire price list in a batch run
   • Through automatic updating of linked price lists if the base is changed.

6. Report Processing for Sales Price

   It is possible to create and run sales price reports in 'Sales Price Report. Open' (OIS530). One example of a report is an internal inspection report for sales prices for analysis of gross profit.