Creating a Pricing Strategy

You can assign custom pricing to each customer account. This gives you tremendous flexibility — you can give most customers the same pricing, but you always have the ability to give special pricing to your most valuable accounts.

When you create your customer database, you need to establish a basic pricing strategy. You can set up basic pricing with only a few settings, which we describe here. Later, you can learn about the more advanced pricing options as you need them.

You specify customer pricing using the boxes in the Order Entry tab in the Customer window. This figure shows the Order Entry tab; the circled boxes are the ones you use to establish your basic pricing strategy.

We cover three pricing options here:

Contracts
Best Pricing
Standard Discounts

Contracts

A contract is a group of items that share special pricing.

You identify contracts with a two-digit contract number. (Although we call them numbers, contract numbers can also include letters and special characters: You may have contract A1, for example, or contract !2.)

Some contracts apply to all customers. Other contracts apply only to those customers to whom you assign them. You can assign up to four contracts to each customer. To do this, you click the Order Entry tab, and specify the customer's contracts in the Contracts boxes, as shown here.

Contracts come in six types, but here we discuss only the three most common: sales flyer, fixed price and flexible.

Sales Flyers offer discounts to all customers. This is the only type of contract you do not have to specifically assign to a customer.

However, you can prevent particular customers from receiving sales flyer prices. You do this through the Best Pricing box, which we cover later.

To identify a contract as a sales flyer, you assign it a contract number from 95 through 99.

You can get sales flyers in two ways: create your own, or load flyers from wholesalers as part of your item file update.
Fixed Price Contracts guarantee a specific price for a product. To guarantee the price, fixed price contracts should be specified first in the Contracts box. When you select an item in order entry, a suggested selling price is calculated. In doing so, the four Contracts boxes are checked for the customer who is placing the order, going from left to right. If the item is found on a fixed price contract, the search stops — it uses the price from that contract.

Suppose, though, that your customer has been assigned a flexible contract (we cover these in a moment) in the first Contracts box, and a fixed contract in the second box. Both contracts include the item they're ordering. In this case, since the flexible contract came first, the lower of the two contract prices is used.

You work with contracts through one of the text-based screens, the (ET) Inventory Contract Price screen. The (ET) screen includes a field that lets you identify a contract as fixed: the Fixed/Flexible field. If you set this field to I, the contract is fixed.

Fixed contracts must also have a contract number that is above or below the range of sales flyer contract numbers. Remember that sales flyers use numbers 95 through 99.

DDMS recommends that you assign fixed contracts numbers below the range of sales flyers. This means you can use contract numbers 0 through 94.

Since you can also use letters in contract numbers, fixed price contracts can also use the numbers 1A through 8z. When a computer sorts numbers, capital letters come after numerals, and lower case letters come after capitals. So 1A comes after 19, and 2B comes before 2b. For a complete list of the sort order, click here.

The first two contracts here, 10 and 2A, are fixed price contracts, and both numbers are less than 95:

Since this customer has fixed contracts listed before any flexible contracts, they'll receive the fixed contract price whenever they place an order for an item that's included on either contract 10 or contract 2A.
Flexible Contracts: These guarantee that a customer pays no more than a certain price for an item, without restricting the customer to that price.

You remember that when the suggested price for a customer is calculated, the search stops if it finds the item on a fixed price contract. If the item is first found on a flexible contract, however, the search continues — if another price also applies to the item, the lowest of the available prices is used.

Suppose a customer orders item 123, which has a list price of $20. You assigned flexible contract A1 to this customer, and A1 carries a price of $19 for item 123. This is a 5 percent discount. The search continues, finding this customer receives a standard 10 percent discount. The standard discount is uesed instead of the contract, since the standard discount offers a lower price.

You indicate that a contract is a flexible contract by setting the Fixed/Flexible field in the (ET) screen to L.

You must also assign contract numbers that are outside the range of sales flyer numbers to flexible contracts. Remember that sales flyers can be numbered 95 through 99.

DDMS recommends that you assign flexible contracts numbers above the sales flyer range. The numbers above 99 all begin with a letter: A1 through zz. If you do this, you can tell that a contract is fixed or flexible simply by looking at the number; you won't need to retrieve the contract record and check the Fixed/Flexible field.

In the Contracts box, the last two contracts, A1 and CC, are flexible contracts, since both numbers are higher than 99:

You can learn more about contracts in your online help: see the topic About Contracts.

Best Pricing

A wide variety of prices and discounts can be used to determine the suggested selling price in order entry.

The factors used to determine the suggested selling price are called the pricing matrix. For more information, see the online help topic About Pricing and Cost.

As we mentioned earlier, if an item is found on a fixed contract, the search for a suggested selling price stops. The Best Pricing box, shown here, determines what happens when the item is not on a fixed contract:

DDMS recommends that you set the Best Pricing box to Y, as shown. If you do so, all available prices and discounts are searched when an item is not on a fixed contract. This includes:

quantity breaks (column pricing)
customer discounts
list price.

With Best Pricing set to Y, the search stops only if the item is on a fixed contract. Otherwise, all prices available to this customer are compared, and the lowest is used.

If you leave the Best Pricing box blank, which is how it's set by default, the search stops when the item is found on any contract, not just fixed contracts. If the item is not found on any contract, quantity breaks, customer discounts, and the list price are searched for the best price.

No matter how you set the Best Pricing box, the list price is used if there are no applicable contracts or discounts.

To learn more about the Best Pricing box, including additional settings and exceptions, see the Best Pricing description in the online help topic In the Customer Order Entry Tab.

Standard Discounts

A standard discount is a discount from the list price that a customer gets on all orders. You can specify a standard discount in the Discount Type and Percent% boxes in the Order Entry tab, as shown here:

To specify a standard discount for a customer, type S in the Discount Type box, and specify the discount percentage in the Percent box. In the example shown here, the customer receives a 10 percent discount from list.

You can also use the Discount Type box to set up cost-plus discounts, and discounts that customers only receive if they pay within terms. For more information, see the description of the Discount Type and Percent boxes in the online help topic In the Customer Order Entry Tab. You can also indicate that standard discounts be taken from the catalog price instead of the list price, using the Catalog Price box, which is also described in In the Customer Order Entry Tab.