Pricing Methods

MAC-PAC supports online entry and maintenance of multiple pricing structures that are applied to customer orders within the Order Processing module. Sales and quote order pricing is performed when parts are entered onto order lines. Prices can be recalculated if changes are made to the order header (volume discounts, header discounts) or the order line (i.e., pricing method, units of measure, or quantity) which would effect the price.

Pricing Terms

The base price, unit price, and extended price determine the actual price for each order line. The price code, pricing date, and Firm Price flag determine how the entire sales or quote order will be priced.

· Base Price: The base price indicates the standard unit price for the part. This is the price of the part before any discounts are applied. Base prices are defined in several places: on contracts, on the Warehouse Balance file, and on price lists. They can also be manually entered onto a sales or quote order.

· Unit Price: The unit price indicates the actual selling price of a part expressed in the pricing unit of measure. The unit price may reflect discounts applied to the base price for a part.

· Extended Price: The extended price is the result of multiplying unit price by the order line quantity. The system automatically calculates extended price.

· Price Code: Price codes determine the pricing method used when the part is sold to a customer. Price codes are associated with parts, orders, and customers. Used in conjunction with each other, they determine the order pricing method.

· Pricing Date: Pricing dates are calculated at two levels: the order header and order line. They determine when an order will be priced. The order header pricing date can default from the system date, the order date, the customer's requested date, or the promised ship date. The pricing date calculation method is determined on Reference File category 412. The order line pricing date defaults from the header pricing date, but can be overridden.

· Firm Price flag: The Firm Price flag indicates whether prices for the order have been confirmed. This is done at the order line level. Order prices can be changed (manually or automatically by the system) until they have been confirmed. After prices have been firmed, they cannot be modified.

Price Codes

Price codes are associated with parts, orders, and customers. Used in conjunction with each other, they determine the order pricing method.

Part Price Codes

The part price code specifies the default pricing method used for a particular end item in a specified sourcing company/warehouse. Part price codes must exist on Reference File category 414. They are stored on the Warehouse Balance file record for each part. When warehouse balance pricing is performed, this code is used in conjunction with the customer price code to determine the method of pricing a particular line item. Below is a list of the valid part price codes.

Part Price Code	Definition
0	Not sellable—indicates that the part cannot be sold. This feature allows control over new products being set up on the Part Master file and obsolete products that should not be sold.
1	Manual pricing—allows the operator to enter the base or extended price amount of a part expressed in the pricing unit of measure. The unit price is calculated automatically if the extended price is entered. The unit and extended price are calculated if the base price is entered.
2	Standard pricing—determines line item prices based on the base price stored on the Warehouse Balance file. When you use standard pricing, discounts are applied to the base price to determine the unit price.
3	Quantity price breaks—allow part prices to be determined based on the order quantity. Up to five quantity price breaks may be established for a part on the Warehouse Balance file. These prices are defined in addition to the part's base price.
4	Quantity percent discounts—applied to the part's base price, depending on the quantity ordered. Up to five percent discounts may be established for a part on the Warehouse Balance file.

Order Price Codes

The order price code indicates how you want to price a particular order. Order price codes can be manually entered onto order lines or defaulted from the ship-to customer associated with the order. Order price codes are defined on Reference File category 415. This code is used in conjunction with the part price code to determine the method of pricing a particular line item. The different types of codes are listed below.

Order Price Code	Definition
0	Automated pricing—allows the pricing method to be determined by the part price code associated with the part being entered.
1, 2, 3, 4, 5	Forced pricing—allows the operator to force a certain quantity price break or percent discounts for a line item regardless of quantity ordered. For example, a customer price code of 3 indicates that the price for the third quantity break or discount percent will be used.
6	Manual pricing—requires that a unit price or extended price be entered for each item. When entering the base or extended price amount for a line item, it must be expressed in the pricing unit of measure. If a unit price is entered, the system automatically calculates the extended price. If an extended price is entered, the system calculates the unit price.
7	Sample pricing—allows the operator to order and ship sample goods at a unit price of zero. This will generate a warning message on the Price Exception Report but has no impact for ‘no charge’ items processed in Order Processing.
8	No charge pricing—allows the operator to order and ship goods at a unit price of zero. This will generate a warning message on the Price Exception Report.
9	Contract pricing—allows the operator to order and ship goods at special prearranged prices or discounts off base prices.
A	Price list pricing—allows you to determine base prices that can be customized to meet specific business situations.

In some countries, it is necessary to manage different types of ‘no charge’ items (price code=8). These line types are gift, sample, and prize. Each must be managed differently through sales and invoice processing. All ‘no charge’ lines must be printed on the Bill of Lading, and according to certain fiscal rules, sample and prize lines need to carry a special description if printed on the Bill of Lading or invoice document. Refer to the Shipping/Billing and Order Information key concepts in this manual for information about the management of gift, sample, and prize line types. In addition, ‘no charge’ items may have VAT calculated for the gift, sample, or prize sales order line. Refer to the section on VAT for Gifts, Samples, and Prizes (OP) in the VAT Processing key concept in this manual.

Customer Price Codes

Some order price codes can be specified as the default price code for a particular customer. Order/customer price codes are defined on Reference File category 415. Default customer price codes are stored on the Customer Address file but can be overridden on Order Processing or Accounts Receivable screens. When warehouse balance pricing is used, this code is used in conjunction with the part price code to determine the method of pricing a particular line item. The price codes that can be associated with a customer are listed below.

Possible Customer Price Codes	Definition
0	Automated pricing—allows the customer's pricing method to be determined by the parts ordered. This method defers the pricing method decision to the part price code.
1, 2, 3, 4, 5	Forced pricing—allows the sales order entry clerk to force a certain quantity price break or percent discounts for a line item regardless of quantity ordered by the customer.
6	Manual pricing—requires that a unit price or extended price be entered for each item ordered by the customer.

Applying Price Codes to Orders

The pricing method is determined by a combination of customer, part, and operator entered data. It is automatically determined (by the combination of the Warehouse Balance file and Order/Customer Address file price code values associated with each line) unless the operator specifically enters a price code on the line screen.

Note: On sales and quote orders, the price code is retrieved for the customer specified as the ship-to customer on the order.

When an operator enters a price code, the unit price is obtained by using the pricing method associated with the price code. Again, the manually entered price code combines with the price codes associated with the part ordered on that line to determine the line pricing method. The following matrix indicates how the customer price code (from the ship-to customer) and part price code combine to control how each line on a sales order is priced.

	Part Price Code
Order/Bill-to Customer Price Code	Manual 1	Standard Price 2	Quantity Price Break 3	Qty Percent Discount 4
Automatic 0	Manual	Standard Price	Price Based on Order Qty	% Discount based on Order Qty
Forced Price 1	Manual	Quantity Price Break 1	Quantity Price Break 1	% Discount 1
Forced Price 2	Manual	Quantity Price Break 2	Quantity Price Break 2	% Discount 2
Forced Price 3	Manual	Quantity Price Break 3	Quantity Price Break 3	% Discount 3
Forced Price 4	Manual	Quantity Price Break 4	Quantity Price Break 4	% Discount 4
Forced Price 5	Manual	Quantity Price Break 5	Quantity Price Break 5	% Discount 5
Manual 6	Manual	Manual	Manual	Manual
7, 8, 9, A *	* These price codes are not enterable in the Customer Master Maintenance conversation. If used, these codes must be entered/defaulted in the Sales Order Maintenance conversation.

Pricing Method Matrix

The combination of customer and part price codes control how each line on a sales order is priced.

Once a pricing method is determined, the sales order line is initially priced using that method. Depending on the value of the firm price flag, prices can be recalculated if changes are made in pricing method, units of measure, or quantity.

Pricing Date

The pricing date determines when an order line is priced. Pricing dates are calculated at two levels: the order header and order line. The order header pricing date defaults from the system date, the order date, the customer's requested date, or the promised ship date. The default pricing date method is determined on Reference File category 412. The order line pricing date defaults from the header pricing date but can be overridden.

When applying order-level discounts, the header-level pricing date is used. For pricing purposes, only the line-level pricing date is used. Once a pricing method is determined, the sales order line is initially priced. Then, depending on the value of the firm price flag, prices can be recalculated if changes are made in pricing method, units of measure, or quantity.

Note: During the Sales/Quote Order Maintenance, Shipping and Billing, and Postbilling conversations, the pricing changes cannot be made if the line item's firm price indicator is "Yes." This protects firm price quotations that have been made previously. Firm pricing may be specified during original order entry or during order maintenance.

Pricing Exceptions

Pricing exceptions indicate discrepancies between the price and the expected price. Pricing exceptions are caused for several reasons. Any overrides to the initial pricing method will result in a pricing override exception. Sales order and quote order exceptions also occur whenever a part is manually priced or when a unit price is computed to be zero.

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