Before we begin setting up the master files, we need to look closely at the various pricing options available to us. Pricing can be a rather complex issue, since The Application was designed to provide maximum flexibility, and the options chosen when setting pricing parameters have a wide-ranging impact on various parts of the overall system. It is important to have a complete understanding both of your pricing needs and the pricing functionality afforded by The Application before you begin setting up the inventory master files.

In this section we are going to look closely at all the pricing options available, examine each option in detail, and identify some of the advantages and disadvantages of each option. It is important that everything discussed in this section be clear to you. If you have questions about any of the content of this section, don’t hesitate to contact Data Entrée for clarification.

In very broad terms, all pricing in the system is based on

1. The cost of the inventory item, with either a percentage or dollar markup,
2. a fixed dollar amount, or
3. a retail market quote.

All prices are assigned to customers based on

1. Assigning a specific item price to a specific customer,
2. assigning the customer to a price group,
3. assigning the customer to a set price bracket, or
4. calculating the price as a percentage increase over cost.

But these general descriptions hide a great deal of complexity. Complexity is, unfortunately, an unavoidable side-effect of flexibility, and you will see that The Application allows for a great deal of flexibility when it comes to pricing.

Of course, the most flexible way to price products for customers is simply to create a price for each product that is specific to each customer. Under this scenario, every customer would have its own, individually-defined price for each inventory item it might purchase. The Application does allow for this level of flexibility using the Negotiated Pricing option, and, conceivably, you could set up all your pricing this way. You will not choose to do this, of course, as it would require not only that each price for each inventory item for each customer be set up separately, but that each price be changed individually when updating prices.

What you will want to do is create a more automatic way to generate the majority of prices for the majority of your customers, and then use the more specific pricing options to handle special circumstances.

Let us first look at the option that probably best balances automation with flexibility: price brackets. The price bracket mechanism is also probably the most widely used option and is easy to implement.

Introduction

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Pricing Using Price Brackets