Base price versions (preview)
[This article is prerelease documentation and is subject to change.]
This article describes how base price versions work in Unified pricing management. The primary purpose of a base price version is to maintain a list of item base prices for a specific period. The base price is a common price at the level of the stock keeping unit (SKU). Unified pricing management lets you build selling prices by using cost-plus pricing. When you use cost-plus pricing, you first build a price structure that starts with the base price.
The following tables shows an example of a price structure that can be used to build final selling prices based on base prices.
| Pricing sequence | Price component code | Price component type | Description | Price details on the sales order |
|---|---|---|---|---|
| 10 | BAS01 | Base price | Price component code BAS01 must be associated with one of the following price component code types:
|
Base price |
| 20 | MAC01 | Margin component | Adjust the price up or down based on a fixed amount or percentage. | Price adjustments |
| 25 | MAC02 | Margin component | Adjust the price up or down based on a fixed amount or percentage. | Price adjustments |
| 30 | MAC03 | Margin component | Adjust the price up or down based on a fixed amount or percentage. | Price adjustments |
The selling price is calculated by using the following formula: Selling price = Base price ± Margin component price adjustments.
Determining the base price
The cost-plus pricing model works by determining the product cost and then adding a markup to determine the selling price.
- In retail and distribution industries, many products are items that are procured and then sold to customers. For these industries, the base price is typically the procurement price for a product.
- In the manufacturing industries, the base price is typically based on the calculated total cost of the bill of materials (BOM) for a product.
Unified pricing management derives base prices from one of the following two sources:
- The primary source is the item base price that's listed for each product on the Item base price page. To open this page, go to Pricing management > Pre-sales pricing > Base price versions to open the Base price versions page, which lists the base price versions that you've created and shows the dates that each version is valid for. Select a version in the list, and then select Price > Base price on the Action Pane to view and edit the prices that apply for that version.
- If an item doesn't have an active item base price, the system determines whether it has an active cost price in a costing version. A costing version can support a standard cost inventory model for items, where the costing version contains a set of standard cost records about the items and their manufacturing processes.
The following table shows the rules for determining the base price.
| Product type | Industries | How base prices are determined |
|---|---|---|
| Traded items that you procure and then sell | Retail, distribution |
|
| Manufactured items (with BOMs) that use the standard cost model | Manufacturing |
|
| Manufactured items (with BOMs) that don't use the standard cost model | Manufacturing |
|
Base price determination exception
As has been mentioned, the base price is a common price at the SKU level. A price differentiation strategy is often applied when a price manager negotiates with a customer to set up a special price for a specific group of products for a specific date range. These prices should be recorded as sales trade agreement prices. Sales trade agreement prices take priority over base prices.
The following table shows how sales trade agreements are related to selling prices.
| Do applicable margin component price adjustments exist? | Sales price calculation |
|---|---|
| No | Selling price = Sales trade agreement price |
| Yes | Selling price = Sales trade agreement price ± Margin component price adjustments |
Note
To use sales trade agreement prices, your price structure must include a price component code where the Price component field is set to Sales trade agreement.
The following tables shows an example of a price structure that includes a sales trade agreement.
| Pricing sequence | Price component code | Price component type | Description | Price details on the sales order |
|---|---|---|---|---|
| 10 | BAS01 | Base price | Price component code BAS01 must be associated with one of the following price component code types:
|
Base price or Sales trade agreement price |
| 15 | TAM | Sales trade agreement | Sales trade agreement | Base price or Sales trade agreement price |
| 20 | MAC01 | Margin component | Adjust the price up or down based on a fixed amount or percentage. | Price adjustments |
| 25 | MAC02 | Margin component | Adjust the price up or down based on a fixed amount or percentage. | Price adjustments |
| 30 | MAC03 | Margin component | Adjust the price up or down based on a fixed amount or percentage. | Price adjustments |
For example, when this price structure is used, the price engine might find that the following pricing rules are applicable to item EV0001 on a sales order line:
- Activated item base price (BAS01) = $5
- Posted sales trade agreement journal price (TAM) = $8
- Margin component price adjustment (MAC01) = $3
- Margin component price adjustment (MAC02) = $2
- Margin component price adjustment (MAC03) = -$1
Therefore, the selling price for the sales order line is 8 + 3 + 2 – 1 = $12.