About commodity pricing
Important
This content is archived and is not being updated. For the latest documentation, see Microsoft Dynamics 365 product documentation. For the latest release plans, see Dynamics 365 and Microsoft Power Platform release plans.
Applies To: Microsoft Dynamics AX 2012 R3, Microsoft Dynamics AX 2012 R2, Microsoft Dynamics AX 2012 Feature Pack, Microsoft Dynamics AX 2012
Commodity pricing is the ability to set the sales price for commodity-based end items using the market replacement cost of the main ingredient. Commodity items, such as iron ore, coffee beans, and sugar, are items for which there is a demand across commodity trading markets. The price for these items fluctuates periodically, such as daily or weekly, based on global supply and demand. When the price of the commodity item changes, any end item that uses that commodity is adjusted and the new price is updated in the related sales price trade agreement.
Example
This example illustrates how commodity pricing works:
To produce animal feed, 90% or more of its cost comes from one main ingredient, cornmeal. The price of the corn needed to produce the cornmeal is determined by commodity trading markets, usually weekly. So any fluctuation in the cost of the corn not only affects the price of the cornmeal, but in turn also affects the price of the end item, which is animal feed.
Updating trade agreements
Commodity pricing functionality lets you pass new costs, price break quantities, and effective dates to all related sales trade agreements. You can update commodity pricing information in the Create price and margin data form, and review the changes in the Price margin update form. You can then use the Trade agreement button to pass the updated prices to the trade agreements. To actually apply the new prices to trade agreements, you must post the Price/discount agreement journals in Sales and marketing.