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 Customer Order Entry tab. 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 they are assigned. You can assign up to four contracts to each customer. To do this, click the Order Entry tab, and specify the customer's contracts in the Contracts boxes, as shown here.

Contracts come in four 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 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 are specified first in the Contracts boxes. When you retrieve an item in order entry, the suggested selling price is calculated. The four Contracts boxes for the customer placing the order are checked, going from left to right. If the item is found on a fixed price contract, the search for a price stops — the price from that contract is used.

Suppose, though, that your customer is 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 comes first, the lower of the two contract prices is used.

You indicate that a contract is a fixed price contract by typing an I in the Fixed/Flexible field, and assigning it a number lower or higher than a sales flyer. Remember, sales flyers can be numbered 95 through 99.

Silver Plus recommends that you begin assigning fixed price contract numbers in a range lower than the sales flyer range. These numbers nclude 0-94 and 1A-8z. When a computer sorts numbers, capital letters come after numbers, 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, since both numbers are less than 95:

Since this customer account has fixed contracts in the first positions, they 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 the item is found 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 that this customer receives a standard 10 percent discount. The standard discount is used instead of the contract, since the standard discount offers a lower price.

You indicate that a contract is a flexible contract by typing an L in the Fixed/Flexible field, and assigning a number higher or lower than a sales flyer. Remember that sales flyers can be numbered 95 through 99. Flexible contract numbers always begin with a letter, and they must have two characters.

Silver Plus recommends that you begin assigning flexible contract numbers in a range higher than the sales flyer range. These numbers nclude 9A-zz.

In the Contracts boxes, 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 and in Book II: Inventory. To read about contracts in online help, see the topic Contracts. In Book II: Inventory, which has the most comprehensive treatment, see "Volume 3: Contracts."

Best Pricing

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

The factors used to determine the suggested selling price are called the pricing matrix. For comprehensive information about the pricing matrix, see "Chapter 38: How the System Calculates the Suggested Selling Price" in Book III: Order Entry.

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:

Silver Plus 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 price 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 a fixed contract. 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. Additional information about how best pricing is implemented is found on page 4-20 in "Chapter 4: Completing the Fields in the (A) Screen" of Book I: Customers, Vendors, and Salespersons.

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, this 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.