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Pricing when you sell products
Table of Contents
Background Information
There are a number of elements to pricing.
The system maintains average cost
Average cost is updated when new stock is receipted on a Purchase Order
if a purchase order has also freight costs paid to the supplier these will be included in the average cost
If a purchase order has also “Finance Uplift” involved that % will also be added to the average cost
Average cost = total cost of stock / qty of stock
ie if I have 100 in stock at $1.00 and I receive 100 at $2.00
I will then have
Total stock cost after receipt = $100 + $200 = $300
Total # items = 200
Av cost = $300 / 200 = $1.50 each average cost
ie if I have 100 in stock at $1.00 and I receive 100 at $2.00
AND freight to the supplier on the PO of $100
AND 5% Finance Uplift
I will then have
Total stock cost after receipt = $100 + ($200 + $100) * 1.05 = $100 + $315 = $415
Total # items = 200
Av cost = $415 / 200 = $2.075 each average cost
Landed Cost refers to adding costs not from the product supplier (eg shipping freight etc)
Complex landed costing enables
an estimate to be used on stock receipt to increase averge cost
followed by actuals later entered to adjust average cost if required
Simple landed cost enables
Additional costs to be added to the average cost after stock receipt.
See Landed Costing for details
For inter-company Purchase Order from PO to Goods Receipts the price list with the AutoEntity type of "HostCompany" will be used.
Branches
If your organisation has Branches defined on the Host Company (your business/s) then:
Price lists are global - all branches can see all price lists
Prices on the list are branch specific - and must be updated in the branch. Prices in one branch have no bearing on prices in another branch
Stock Articles
Stock Articles have a number of prices on them
Default Sell Price -Used when selling to customers if they do not have a price list price
RRP - Used when selling via a POS (Point of Sale Till) to the public
Default Buy Price - Used on Purchase Orders as default price. If no price here the product cannot be purchased as a unit - check price breaks
Price Breaks - for Buying and selling at different quantities
Adhoc discounts
Adhoc discounts are entered on sales orders by those people allowed to enter them. The invoice journal will have:
A line at the full price
A discount line to the GL Control Account for Ad-Hoc discounts
The customer invoice will only show a single line with the discount and resulting price
There is a summary report of Adhoc discounts to enable review of the use of these
Admin > Sales > Sales Discounts
Discount Requests
Where discounts require approval - a discount request may be created. The approver/s is notified by sms and email and is provided a link to click into the discount approval portal where they can enter a discount per order line ($ or %).
Once the discount is approved in the portal the order status will be updated.
Price Breaks
Used when price breaks are available from suppliers or to customers.
Price Lists
If you are not using price lists - customers will get default pricing or promotion pricing (eg pricing contracts).
If no price is found on a price list then the standard price will apply - unless you have ticked on "limited to price lists" in Maintain Stock Control Settings in which case if it is not on the price list the customer cannot purchase it.
Price lists have a currency - customers will be able to link to price lists using their currency only
Each customer may link to a price list
Have customer groups who will always pay the same amount - there are a couple of options
Link customers to a Price List and update prices through the Price Matrix
Example Supermarkets get it for $20, Corner shops pay $23
Note - if no price is found on a price list then the standard price will apply
Use the Tags to make it simpler to manage multiple related price lists in the price matrix so can show only those with a particular tag.
Price list Management
A price list may have a future price list with expected future date. This provides ability to print the future price list for customers with the new expected date so they can be informed in advance.
The calculation of the new prices can use existing prices, average cost or RRP as a basis. Brands that are flagged to be price managed separately can be ignored in the price update.
To import prices
Select the relevant price list
Drop xls with two columns (SKU, Price)
Edit > import prices
Prices is a list of the products on the price list
References
The list of customers linked to the price list
Report
A PDF that can be printed to be emailed to a customer - note that this is an example and can be changed to suit the business and can include images and links.
Target Margin
Target Margin is the minimum margin allowed on a product when compared with Average Cost when updating the price list
Bulk Purchase Discounts per Price List
Provide Bulk Purchase discounts for particular customers? Use Volume Discounts linked to a Price List on the Article
Example Distributors get it for $48 when they purchase more than 10
Volume discounts per price list
Discount based on the quantity across different items sold ? Use Price List -> Volume Discount
For example - as long as my customer takes 20 cartons of any complying items - they get a discount of 12%
Volume discounts are calculated only
For customers using the price lists
Counting items that are not manually discounted or linked to a promotion
Setup
Requires user created Profile Option "No Volume Discount" created on Article - Type = Boolean, Usage = item for sale
Any Article not included in the count of articles on a sales order is to have this checkbox ticked
Turn on on host company profile "No Volume Discount" - Any debtor that cannot receive volume discounts will have this checked.
Enter a Quantity of articles and a % discount to use on Price lists
Quantity is a count of non-discounted and non-promotional articles on the sales order
Usage
Enter items onto your sales order until you cross the volume threshold
Volume discounts are price list based and apply only to items that are not discounted and not on promotion
On Save of each line - the price of each individual line updates as required with the discount.
ie if the volume discount applies on 10 or more and you have 9 on the order. The next item will cause all related lines to recalculate and show the applied discount. An information message will also show.
Price Matrix
The price matrix allows a view or edit (depending on user security) of price lists including current and future price. Users can only view their branch price lists.
Setting Price Lists future dated prices
Choose a future date. Optionally enter a % uplift to apply to all prices based on
Current Price
Average Cost - not adding any SKU's to the price list
Average Cost - adding all SKU's for sale with an average cost to the price list
Can also
Ignore any brand flagged as "Use RRP" or "Default Markup" - setting that brand based on these settings on Supplier
Use RRP for all articles in the list
Calculate all values - these will be available for viewing in the price matrix - but not yet active. Review and update manually in the price matrix.
When the "Apply Price Change" is used - the price will be updated midnight of the date noted.
Employees with the flag "Sales Rep" will be notified using System Internal Messaging to Users
Price Matrix - current and future prices view or edit
New price shows future dated prices.
Promotions
Have short run specials based on purchase quantities from a particular supplier? Use Promotions Module and see Using Promotions
for example buy 6 of anything supplied by Brand A and you get a 17% discount?
End of line items is 20% discount
Buy x get y at price z
Buy 5 qualifying items from a group of 10 get a discount
Have a Template order perhaps with special pricing when taken together? Use Promotions Module "Templates" - see Using Promotions to quickly add all items to the order with a single selection
for example we sell a "Starter Pack" at special prices that consists of = a pack of 20 water + 10 cola + 5 fruit drink
Have a contract price for a customer or group of customers that lasts for a period of time? use Promotions
Special type of promotion "Price Contract". Can be created from a sales order (Action > Create Price Contract) then edit and update date ranges etc
Sales contracts are checked before any other prices are checked and can be above or below prices found on price lists, other promotions etc.
When creating from a sales order - adds only items that are already on the sales contract.
Branches
Does the company have branches? Prices are branch specific. Each price list may have prices by branch
Promotions can be global or limited by branch.
For information about SaaSplications go to http://saasplications.com.au