Now you can see all the pricing calculated values available to be displayed and evaluated in the Dashboards.

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In this use case, pricing practitioners have the ability to configure formula-based agreements to improve contract business contribution margin, eliminate manual errors and increase customer trust, and reduce margin compression due to out-of-date pricing.

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title Value Projections
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As a [Pricing Manager/Sales Rep], I want to have the ability to configure formula-based agreements, so I can:

• Improve contract business contribution margin.

• Eliminate manual errors and increase customer trust.

• Reduce margin compression due to out-of-date pricing

The overall design requirements are summarized in these articles:

Functional Requirements

For this use case, the functional requirements are:

• Ability to configure the agreement with a customer or group of customers.

• Ability to select a product or group of products.

• Ability to select the agreement start-date and agreement end-date.

• Ability to select an agreement currency.

• Ability to route the draft agreement through a pre-defined approval workflow.

• Ability to override calculated prices.

• Ability to route recalculated or overridden prices into an approval workflow.

• Ability to use a standard template to guide the user through configuring the complex formula per product or group of products.

  • Ability to activate or de-activate.

  • Ability to select a product or group of products based on the agreement product scope.

  • Ability to configure parameters to be used as an input to calculate product(s) prices. E.g.

    • Base Adder

    • Price Swing Guardrail (Upper, Lower)

    • Price record decimal precision (e.g., 4 Decimals)

    • Adders: Ability to include multiple adders (Up to 3 Adders)

    • Pricing UoM (Lbs., KG)

    • Price Calculation Frequency (Weekly, Monthly, Quarterly)

    • No. of periods (1, 2, 3, 4)

    • Lag (0, 1, 2)

    • Period offset (+1 Month, - 1 Month)

    • Index Value (Value of, Average of, Minimum of, Maximum of)

    • Select the relevant index from a pre-configured list of approved indexes

  • Following table illustrates the prescribed calculation scenarios:

Index Value

Periodicity

# of Periods

Lag

Offset

Price Calculation

Date Range

Average of

Monthly

3

-1

Avg of 3 months starting previous month

Nov 1 - Jan 31

Average of

Monthly

2

-2

Avg of 2 months starting 2 months back

Nov 1 - Dec 31

Value of

Monthly

1

-3

Value of 3 months back

Nov 30

Average of

Quarterly

1

-1

Avg of 1 quarter starting previous quarter

Oct 1 - Dec 31

Average of

Quarterly

2

-2

Avg of 2 quarters starting 2 quarters back

Apr 1 - Sep 30

Average of

Quarterly

1

-1

-1M

Avg of 1 quarter starting previous quarter with a one month back offset

Sep 1 - Nov 30

Average of

Quarterly

2

-2

+1M

Avg of 2 quarters starting 2 quarters prior with a one month ahead offset

May 1 - Oct 31

Value of

Quarterly

1

-1

Previous quarter value

Value as of Dec 31

Average of

Weekly

4

-2

Avg of 4 weeks starting 2 weeks back

Avg of weekly values from Dec 21 - Jan 8

Value of

Weekly

1

0

Current Week Price

Value valid on Feb 5

• Ability to configure the table above at the product level or at the raw material level

  • Select the mix of raw material(s) related to the selected product.

  • Add the associated contribution weight per raw material type.

  • Determine the decimal precision per raw material.

  • Ability to select the relevant index from a pre-configured list of approved indexes.

• Price Calculation:

  • New Price = Calculated Formula Price

Non-Functional Requirements

For this use case, the non-functional requirements are:

• Automatically recalculate prices based on the Calculation Period and the contract start date.

• Store approved prices in a Price Records table

These are the user stories associated with this use case.

User Story Name - Store Historical Prices

I want to: Store prices in a price history table with Pricefx

so I can: Use it as the source throughout the downstream processes

Acceptance Criteria:

Prices will be stored in Pricefx Data Source to allow for growth and scalability.

Prices will be stored for up to 2yrs. Pricefx will configure a cleaning task to remove prices beyond 2 yrs. Cleaning Task will run on the weekend.

Price History table will include similar key and attributes in the LPG

User Story Name - Extract new Price Records

I want to: Extract new price records from the Historical Price Record table

so I can: Use it use to trigger processes in downstream applications

Acceptance Criteria:

Prices will be exported using a CSV file placed on an agreed on Pfx SFTP folder.

Prices will configure a backend task to run on a nightly basis in order to scan the price record history table for new prices and export them on a single CSV file.

CSV file will include per line the Customer ID, Product Code, New Price, Effective Start Date, Valid-to date (agreement end date)

Customer will have to configure a task to remove the newly placed outbound files from the SFTP folder into another folder.

As a Pricing Manager/Pricing Administrator, I want to use an interface to see all formula-based price records at the Product Code / Customer ID level, so I can effectively manage and administer the price updates and ensure prices are calculated and communicated to the customer based on the agreed-on contract terms.

User Story Name - Agreement Conditions

I want to: Be able to store all agreements conditions a data source

so I can: Use it as inputs to or trigger to the automatic price calculation process

Acceptance Criteria: N/A

User Story Name - Price records Key

I want to: See prices at the Product ID / Customer Level in a single interface

so I can: Leverage Pricefx out-of-the-box capabilities to efficiently interact with those prices

Acceptance Criteria:

Leverage the out-of-the-box capabilities of Pricefx Live Price Grid

The LPG primary keys are Product Code / Customer ID

LPG should automatically include new price records once a new Formula-based agreement is created.

The LPG should automatically remove price records for expired or deleted agreement

User Story Name - Price Records Product and Customer Attributes

I want to: See the key product and customer attributes that describe the price record

so I can: Use it to interact with the price records

Acceptance Criteria:

Product Description and (up to 3 Product attributes)

Customer Name and (up to 3 Customer attributes)

Formula related attributes (up to 3 Formula attributes)

User Story Name - Price Records Formula Attributes

I want to: See the key formula parameters

so I can: Use it to interact with the price records and understand the variables that influence the new prices

Acceptance Criteria:

Index Type, and Index Value

Index Aggregation Method

Periodicity

Lag and offset parameters

Lower and Upper Price Swing Guardrails

User Story Name - Price Records

I want to: See the current price and the effective stat date along with the prior price and the prior effective start date

so I can: Understand the difference between the old and the new prices

Acceptance Criteria:

Current Price

Current Price Effective Start Date

Prior Price

Prior Price Effective Start Date

User Story Name -Automatic Price Calculation

I want to: Automatically trigger the price calculation based on the predefined triggers in the formula contract

so I can: Ensure that prices are calculated on a timely manner based on the agreed on contract with the customer and reduce any delay.

Acceptance Criteria:

Price calculation to be triggered automatically based on an event-based task that will run nightly to determine if any price record should be updated.

Price to be calculated based on pre-defined rules.

Price will be automatically approved

As a Sales Rep/Pricing Manager, I want to use an interface that can be used to set up the formula contract parameters, negotiate the parameters with the customer, and approve the formula agreement. Once approved, the parameters will be used as triggers and input to calculate the next period price.

User Story Name - Agreement Header

I want to: Use an interface that allows me to capture the header level of the formula agreements

so I can: Ensure that the first step of the formula agreement is defined appropriately, and become the source and an input to the follow up step (i.e., Step 2: Items)

Acceptance Criteria:

Pricefx will use the header object of the Agreements and Promotions Module as the interface.

Header Inputs:

Start Date

End Date: This field will be set to 12/31/3999 as a default.

Customer(s): provide access to the customer master and ability to select a single customer or multiple customers. User can choose the advanced filter feature to select customers.

Product(s): provide access to the product master and ability to select a single customer or multiple customers. User can choose the advanced filter feature to select customers.

Agreement Currency: Drop down menu to choose a currency

User Story Name - Exchange Rate table

I want to: Load the currency conversion data into Pricefx Currency Conversion table

so I can: Use it as an input to the next period price calculation

Acceptance Criteria:

Data to be loaded in Pricefx Data Source table either manually through Pricefx Excel Client, or automatically integrated via using CSV file placed on a Pricefx dedicated SFTP folder on a pre-agreed frequency.

Must have column definition: From Currency, To Currency, Periodicity, Values. (Up to 10 customer’s selected fields)

User Story Name - Agreement Header – Price Calculation Date

I want to: Set up the agreed-on price update date

so I can: Ensure price calculation is triggered to calculate the new prices as of that date and set the new price effective start date is calculated based on the calculation date.

Acceptance Criteria:

Price calculation frequency selection: a drop down menu that will have the following options:

will always be trigger on the 1st day of the month,

-1st of the quarter,

-1st day of the week

User Story Name - Agreement Item – Active Status

User Story Name - Agreement Item – Final Price Decimal Precision

I want to: Define the decimal precision for final calculated price

so I can: Set it up based on the agreement with the customer

Acceptance Criteria:

Prices in Pfx appear in accordance with the decimal precision rule.

Rounding will be applied to only the final calculated price.

No rounding will be applied to the intermediary calculations required to produce the final price, such as UoM conversion step, currency conversion step, or any intermediate addition or multiplication operation

User Story Name - Agreement Item – Price Swing Guardrails

I want to: Set a Lower and Upper price swing limits  

so I can: Ensure that new calculated prices can be only effective if the price swing amount exceeds the pre-determined guardrails

Acceptance Criteria:

Price Swing Guardrails are set as an absolute value rather than %

Price Swing Guardrails are set  on formula level

Example: If “Lower Limit”  <= P2-P1 <= “Upper Limit”  then P2 = P1, else, P2-P1 > Upper Limit or P2 – P1 < Lower Limit then P2 = P1 + Price Swing

User Story Name - Agreement Item – Periodicity

I want to: Determine the price calculation frequency

so I can: Use it as:

Set up the agreed-on frequency with the customer.

Trigger to automatically recalculate the price

Acceptance Criteria:

Annually, Semi-Annually, Quarterly, Monthly, Weekly

User Story Name - Agreement item – Index Value

I want to: Assign an aggregation method to the index value

so I can: Use it to determine the estimated value of the index based on the agreed-on method of calculation

Acceptance Criteria:

Average of, Minimum of, Maximum of, Value of.

User Story Name - Agreement Item – Lag/offset rules

I want to: Define the time-period (Start/End time) that will be considered to calculate the index value

so I can: Identify in the contract what index period to use and how frequently to adjust prices

Acceptance Criteria:

Please refer to Table-1 above for example of Lag and offset

Lag and offset can be applied at the product code level or at a raw material level

User Story Name - Agreement Item – Adders

I want to: Be able to apply adders to the new contract pricing

so I can: Add or subtract to the base price either permanently or temporarily for a period of time (i.e. Jan-Feb only - then it reverts back to the normal base price).

Acceptance Criteria:

(Up to 3 Adders)

Adders are considered a manual entry. (Not pulling from a parameter table of from a data source)

Adders will be added to the new calculated prices.

User Story Name - Agreement Item – Pricing Raw Material

I want to: Be able to configure raw material(s) and the associated weight

so I can: Use it as input in the new price calculation

Acceptance Criteria:

Once selecting the Product Code, allow the user to determine the raw material that will be used to make up the product along with the associated weights.

It is no necessary that the weights should add up to 100%

Ability to map the raw material to an index.

-Example: Product Code = X

Raw Material 1 = Ammonia

-Index 1 = Ammonia IHS Index

-Weight = 75%

Raw Material 2 = Natural Gas

-Index 2 = NYMAX NG Index

-Weight = 50%

User Story Name - Agreement – Approval Workflow

I want to: Be able to submit the agreement for approval

so I can: To ensure agreement conditions are accepted by the required level of authority

Acceptance Criteria:

One level of approval (Pricing Manager or Sales Rep à Product Manager)

Approval logic based on metrics from the current agreement on either header or item level

As a Sales Rep/Pricing Manager/Pricing Administrator, I want to load several data tables into Pricefx tables, so I can use it through out the formula contract configuration, and for the next period price calculation.

User Story Name - Index data table

I want to: Load the index data into Pricefx Index table

so I can: Use it as an input to the next period price calculation

Acceptance Criteria:

Data to be loaded in Pricefx Data Source table either manually through Pricefx Excel Client, or automatically integrated via using CSV file placed on a Pricefx dedicated SFTP folder on a pre-agreed frequency.

Must have column definition: Index Source, Periodicity, Values, UoM, UoM conversion factor. (Up to 10 customer’s selected fields)

User Story Name - Exchange Rate table

I want to: Load the currency conversion data into Pricefx Currency Conversion table

so I can: Use it as an input to the next period price calculation

Acceptance Criteria:

Data to be loaded in Pricefx Data Source table either manually through Pricefx Excel Client, or automatically integrated via using CSV file placed on a Pricefx dedicated SFTP folder on a pre-agreed frequency.

Must have column definition: From Currency, To Currency, Periodicity, Values. (Up to 10 customer’s selected fields)

The following tables can be either manually loaded in Pfx via Pfx Excel Client or can be automatically integrated using CSV files in a Pfx dedicated SFTP folder:

• Index table that includes the index source, monthly and weekly values, rate, UoM, Conversion factor

• Currency conversion table that includes the from and to currencies, monthly and weekly values, FX rates

• Raw Material table: a mapping table between the Product and its constituent raw material along with each raw material contribution/weight to the product.

• Adder 1, Adder 2, Adder 3: parameter tables that stores adders that can be added to formula at the product level.

This represents the out-of-scope business functions and features for this use case. They can be configured, but by default they are not included in the Chemical Industry Catalog.

• Ability to assign a Fixed Price to a product within the Complex Formula guided template.

• Ability to calculate prices based on Disaster or Severity contract conditions.

• Ability to simulate prices based on index forecasted values.

• Ability to apply rounding rules within each step of the price calculations.

• The Measures and Decision-making KPI’s

• Reporting and Dashboards

• Notifications and alerts

• API method integration

• Customer-Facing templates with calculated prices

The design and the implementation of the Complex Formula Builder is going to utilize the suite of Pricefx out-of-the-box features and capabilities across multiple Pricefx modules, Agreements & Promotions, Price Setting, and Integration Manager modules. The flowchart below illustrates the end-to-end process and mapping of the process components to Pricefx modules and specific capabilities.

The end-to-end Formula Contract agreement setup and price calculation process:

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title Formula Contract Setup
The design and the implementation of the Complex Formula builder is going utilize the suite of features and out-of-the-box capabilities of Pricefx that Agreements & Promotions Module. This module will be the frontline interface that will be leveraged by either the Sales Representative or in some cases will be utilized by the Pricing Manager in collaboration with the Sales Rep for the purpose of: Streamlining the negotiation process with the end customer Capturing the agreed-on contract parameters Approving and producing a customer facing PDF document for the purpose of communicating the approved agreement with the end customer. The Agreements & Promotion object within the Agreements & Promotions Module consists of 5 sub-objects, the chart below depict the prescribed process with Pricefx Agreements & Promotions module: Image Removed Header The user interface that will allow the user (Sales Rep, Pricing Manager) to select agreement scope a) Customer(s), b) Product(s), c) Agreement Start and End Dates, d) Agreement Currency. And provide the user with access to descriptive analytics that KPI’s based on the agreement scope.   Image Removed The user interface that will allow the user (Sales Rep, Pricing Manager) to configure and build the component of the customer formula by product or group of produces. The below features illustrate the prescriptive solution within the Items tab: Active: (Yes/No): On/Off Switch to engage or disengage the formula calculation Product(s): Allows the user to select products from the agreement product scope. Product Rules: Allows the user to configure the Base Adder, Base Lower and Base Upper Bounds, and the number of precision decimals for the price. The image below illustrates how those parameters will be configured within Pfx. Image Removed Formula Configuration: Formula configuration is managed by its own guided workflow that is embedded within the Items tab and after the selection of the product(s). it allows the user to map an index to a product(s), and set up the periodicity, the # of periods, the lag, and the offset parameters. (Illustrated in Table-1 above). Image Removed The configuration of the formula can be applied at the raw materials level (one level below the Product Code). Image Removed

This section teaches business users how to apply our solution to this use case or similar ones through a step-by-step process. Follow along to learn and practice.

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title Business scenario
The use case focuses on automating contract pricing calculations to provide insights and track changes in product cost or market price against fixed margin base. Our solution aims to eliminate human errors and reduce time-consuming manual processes. In the business scenario, as a Pricing Analyst/Manager, you're required to review current contract pricing results, make adjustments, and recalculate the contract. This involves reviewing calculations and conditions tables, the workflow for the approval process, and the customer insights dashboard. Using complex formulas for specific pricing results is central to this process thus showing the need for accuracy and efficiency in contract management. Image Removed

The first step for this Use Case is to review current contracts’ status and performance to identify those contracts that are close to expiration and need to be renewed. For this step we will use the Chemical Contracts Renewal Dashboard as our Analytics capability.

Login to Pricefx

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1. Click on the Dashboards option in the main menu. You will see then a blank dropdown for selecting the Dashboards. If you click on the Dashboard dropdown, you will see a variety of the prebuilt dashboards that are included by default into Pricefx Chemical Industry Package. The learning partition includes demo data. In the normal scenario to use these dashboards you will need to have Product Master, Customer Master and Transaction data loaded into the Pricefx.

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2. Select the Chemicals Contract Renewal Dashboard option from the list.

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3. In the Contracts Performance table, you will notice the column Days to Expire values (display may vary). Here you can identify the contracts that are closer to renewal and may need some price changes for better profitability. You can compare the Contracts’ Performance previous results with the Approved Contracts table results.

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Under the Contract Performance table, you can click on the contract number to open the Contracts window in a different browser page automatically.

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title Step 2: Review Contract Pricing Results
The second step is to review the current contract prices to identify opportunities and make changes for a better profitability. For this step we will use the Agreements and Promotions capability. Using the main menu, locate the Agreements and Promotions path, like this: → Agreements and Promotions → Agreements and Promotions. Under the main Contracts window, use the Name search field column to locate the contract number you are looking for. In this example we are using C-272 Image Removed Select the contract by using the checkbox. Notice at the bottom some additional action icons are displayed, click on the Duplicate icon to recreate a new contract to work on the price changes.   Image Removed You will get a confirmation message at the top of the window. Now you can locate and click on the new duplicated contract. Image Removed You must change the name of the contract to easily identify it. Click on the pencil icon. Image Removed

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title Step 3: Rename New Contract
After you clicked on the pencil icon to rename your contract, provide a name for your contract and click on the OK blue icon. Image Removed Under the Header tab, notice the validity period is the same as the original contract. Using the Calendar icons you can change the validity of this new contract. Extend the contract validity for the current year. Image RemovedImage Removed

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title Step 4: Input Parameters
You can change the Input Parameters of your contract by adding customers and products at a Header level. Image Removed You can add products at a Header & Item level. On the right side of the window the Calculations results at a Header level. These results come from the original contract. The blue Show hyperlinks allow to review additional historical information in graphical charts. Image Removed

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title Step 5: Items
Image Removed You can select the condition by clicking on the checkbox to display more details per item level which you can see under the Items tab where the contract conditions are listed. Image Removed The blue Show and Open hyperlinks display/enter additional information related to the selected condition. When an item is selected, additional action icons appear at the bottom to maintain the records. Image Removed Panel bgColor #DEEBFF Good to know: in Input Parameters tab in the right hand side dialog window, you can use the expand button to make changes directly. After you have made all the necessary changes, click Apply. Image RemovedImage Removed

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title Step 6: Adding Value to Existing Scales
When making your changes, you can use different Base values as you have noticed int he previous step. When the conditions have the Include Scales box checked, you can open the listing by checking the Expand icon. Image Removed To add values, click then on the Base Adder column. To select another product and enter additional scales, click on Duplicate Records icon at the end of the row. Here you will have to enter Targets and Base Adder values. To save the changes, click Apply and close the dialog box. Image RemovedImage RemovedImage Removed

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title Step 7: Review Formula
This can be helpful in understanding how the condition calculation works, should you need to adjust it. To review the formula, click the Open box under the Formula Configuration. Image Removed This is what you will see: Image Removed You can now use the dropdown to add another Formula Element into the calculation. If, for instance, you choose Index value, this will appear automatically and changes will be added to the formula. Image Removed

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title Step 8: Make Changes
You can change the Calculation Period to take advantage of price changes as frequently as you may need them. The dropdown menu will display an array of options from monthly to quarterly to rolling 3 months etc. Image Removed You can continue and use the Index option to elect appropriate indexes. Note that the system will display a warning message when Contribution percentage values are required. Image RemovedImage Removed To resolve this error, enter your selected value in the Raw Material Contribution % field and in Index Contribution %. Save changes by clicking Confirm Changes at the bottom. To add extra currencies, use the Calculation Output Types section. Click the Expand icon and using the Currency dropdown, select an option from the listing. You can use the dropdown also to select Unit of Measure from the list. Click on Apply blue icon at the bottom of the dialog box to save changes. To manage surcharges, scroll down and open the Surcharge dropdown list. Here you can select the item you want and enter a value in the Surcharge Amount field. Panel bgColor #DEEBFF Good to know: Alternatively, you can include input parameters by using the Open boxes for each category. Image Removed

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title Step 9: Calculations
To review previous calculations, click on the Calculations tab → Show. This will display more details to make sure you have all the information before recalculating your changes. Image Removed To recalculate changes, after you have completed all the adjustments for the existing condition, you can click on the Recalculate box to apply. Image Removed The system will display a warning notification that products must be selected at Header level as well. Image Removed To do this, click on the Header tab and under Input Parameters, click on the viewing icon for Products. Image Removed Now you can filter the main Product Master list using your dedicated industry. In our example we use Chemicals. Click the checkboxes to select the products you have previously selected for the Items conditions, then click the Select Items blue box at the bottom. Image RemovedImage Removed Now the system will display the selected products at Header level. Click on Recalculate once more to successfully process the calculation. A confirmation message will displayed by the system to notify you that the calculation has been successfully processed. Image Removed

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title Step 11: Workflow and Approval
After completing the previous steps, your current status for the contract will be Draft. The system displays workflows available to complete the approval process. As soon as you click on the Submit icon, the approval process starts. Image RemovedImage Removed You can now submit the contract for approval. To do so, click the Submit button at the top-right corner of the window. Follow the notifications and submission steps as recommended by the system to complete the approval. Image Removed Panel bgColor #DEEBFF Good to know: With the Paper Plane release, you can now approve and watch different contracts right from inside your dashboards by using the hyperlinks available. Learn more, here.

Now you can move on to identifying and reviewing the required company parameters. This is the next stage in this use case and it is important for the contract pricing calculations. The company parameters we consider for this are market indexes, raw materials or cost plus factors.

You can use the Company Parameters to make changes for new calculations. To locate this button, navigate to the top-right corner of the dialog window and click on the Company Parameters icon.

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On the left side of the window, you'll see Categories folders for organizing parameters. Use the Add Folder icon at the bottom to create new folders. Find the folder you want and click on it to view the defined parameters on the right side of the window. These parameters are essential for contract pricing calculations. To create new parameters, click on the Add Parameter icon at the top-right corner of the window.

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Choose any available parameters by clicking on the checkbox. On the right side of the window, you'll see the defined values, which are calculated based on a combination of dimensions related to Chemicals products. You can modify or create new records/values using the Add Record or Mass Edit icons at the top-right corner of the window. Then, review the parameters to validate the values available for the contract pricing calculations.

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To do this, click on the main menu and go the following path: Analytics → Data Manager → Data Sources.

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Once the system displays the Data Source tables you will see the rows contained under each table under the #Rows column. You can now click on the table called Customer Insights Aggregated Data Chemicals. You will notice that most of the fields int his table are related to the Customer Insights Dashboard information. some of these fields are defined as key fields. This allows them to connect to other Data Sources (tables) during the creation of Datamarts.

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To edit your Data Source tables, you can use the action icons located at the top-right corner of the dialogue window.

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If you want to visualise the content of the fields, click on the Data tab. this will allow the system to display the content of the table along with status and results of previous calculations such as invoice prices, gross margins and so on. To return to the main listing, click on the blue arrow in front of the title field.

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For information maintenance you can use the function icons in the top-right corner of the widow.

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Now you can review other Data Sources related to this industry.

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To review Datamarts, you can follow this path: Analytics → Data Manager → Datamarts.

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At this point, the process is similar to Data Sources. The system displays a list of existing Datamarts, and the # Rows column shows the number of records.

If you click on the Standard Sales Data Chem datamart, you can see the combination of fields that collect information from different Data Sources. The main source is displayed in the left area (TXStandardData_Chem(DS)). You can see under the Owner column different sources of information as well as under the Field Picker section on the left area of the window.

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To collect and connect information from different source tables, the Datamart must have a key to a Data Source that has a mirror key allowing you to connect the two.

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To review the information displayed and the status of the Datamart click on the Data tab. This is the information used/displayed in the Dashboards.

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If you want to see/display all the available fields, you can use the Settings icon at the top-right corner of the window and chose the Select Fields to Display option. Use the checkboxes to make your selections or use the main checkbox by the Column name to select all. Click on the Apply blue icon.

👥 Stakeholders

Key stakeholders, including Sales Representatives, Pricing Managers, and Pricing Administrators, are targeted in this use case to load essential data into Pricefx for accurate pricing calculations, create and negotiate tailored formula agreements for customers, and ensure these agreements are approved and implemented seamlessly. The use case focuses on calculating formula-based prices during designated intervals, enabling easy review and integration with downstream systems.

Additionally, stakeholders are supported with maintenance and pricing agreements revision, incorporating supplemental capabilities to enhance the overall pricing strategy.

Business Context (Use Case Description)

Agreement Lifecycle Workflow

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Agreement Workflow 

 Formula Management 

 Agreements can either be fixed or formula based. Fixed agreements are based on a fixed price or are fixed based on an adjustment relative to standard list price or other reference, they do not require the use of formula management. Formula-based agreements utilize a dedicated formula creation and management capability within Pricefx. For more details see the cross-referenced documentation below. 

Agreement Setup 

The primary focus of the agreement set-up step is to create a new agreement for the first time. This step assumes that: 

• formulas needed in an agreement have already been created in the formula library, and  

• any and all required reference data, including market index data and other related data, is available. 

The key elements of the agreement setup step are broken down into header and line item inputs. Additional elements for workflow, attachments, messages, analytics, and published documents will be addressed here in some detail but may have other extended documentation as noted. 

Scenario Evaluation 

A variety of tools are available to compare formula agreement scenarios in order to present the customer with options or to consider as strategic alternatives during a sales negotiation. 

 Business analysts can utilize forecast data to simulate Formula impactacross multiple scenarioson predefined KPIs (Key Performance Indicators) such as margin, revenue and volume. In most cases, looking at historical data will be possible and sufficient to show what a previous period (e.g. - last 12 months) would have looked like given alternate formulas or agreement inputs. 

The accelerator will allow users to compare scenarios and to activate the desired scenario directly from comparison dashboard to simply decide which scenario to use. Active and Inactive flags support multiple comparisons and the ability to save alternative scenarios for future use. 

Forecast-focused evaluations require the customer to generate and deploy required forecast data as a standard data object / data table. 

Governance & Workflow 

Before an agreement is approved and transmitted to the ERP or other system of record for use in live pricing, many teams will require a managerial review and approval step.  Workflow and approval capabilities include automated approval workflows as well as establishing the parameters to comply with corporate goals. 

The Accelerate Approval Workflow Package core capability supports: 

• Workflow creation and changes 

• Agreements specific approval steps 

• Conditional expression creation and management of each approval step 

• Full execution of workflow processes 

• Workflow history tracking 

 Out of the box accelerator steps can include: 

• Approvals based on math or logical expressions and data lookups 

• Approver types (e.g. - approver and watcher) 

• Support from user and user group assignments 

Execution 

Once an agreement has all required fields populated by the user, is successfully calculated, saved, and has completed all required approvals, it is ready to be executed. Execution in this case is focused on generation and transmission of the final price and other details to the ERP or other system of record. The Accelerator generates condition records within Pricefx. Once executed, the agreement will then recalculate prices as required by the calculation period inputs. 

Publishing documents

Draft and/or finalized documentation can be created in MS Word, Excel, and PDF formats as a standard. These publication templates are configured based on customer needs and typically include header/footer and branding, body elements for calculated pricing, formula, and inputs, and other related documentation.

Once generated, documents can be exported or emailed to the customer from within Pricefx. However, Pricefx does not have a documents repository and is not an email server system. Pricefx is also not a CLM (contract lifecycle management tool). Pricefx can send CLM systems agreement pricing and related details as needed via API. Pricefx is not used for CLM “paper process” functions like legal clause libraries, redlining, and contract repositories.  

(Re) - calculation 

The calculation period defines the primary logic for recalculating pricing for the agreement's duration. This can be initiated based on dates/times, updated or more current and complete formula inputs, or can be manually triggered. Time and event-based triggers can also be useful as a part of this process. It is also possible for a manual approval to be required before a recalculated result price is approved for production use. 

Recalculation can also act as a trigger for the creation of new customer-facing documents. 

•  Calculation runs according to schedule or related calculation logic 

• Once a calculation is completed and approved, pricing records (Condition Records) are generated and can be exported or otherwise actioned 

Revision / Renewal 

Agreements are valid only for a duration from start date to end date. Once the agreement end date is reached, the agreement pricing will no longer be used in the system of record for active pricing purposes. It is important to have alerting and dashboards to make sure that there is always an active agreement price if desired (See “Actionable Insights.”). When no agreement pricing can be found or the agreement has expired, standard functionality in the ERP system will typically resolve. 

Business analysis may wish to renew an agreement with changes or maintenance of the same rules. Best practice for agreements in Pricefx is to duplicate an agreement and rename/edit the newer duplicate version. Changes can be made, and all new agreement workflow steps are taken to completion. 

Limitations and Risks

The following features and concepts are out of scope for this use case. The features incorporated in this use case are the more common items that would be expected in the scope of formula-based pricing.  Key items that may arise around the use case but are not included and not recommended in the scope are: 

Core Changes to Formula Structure and New Formula Creation

Values for existing features can be specified in the agreement if they’re accounted for in the formula structure. However, no structural changes to formulas are included in the scope of this use case. Any changes to formulas are accounted for in use case PM-15. 

Mass formula revision

When formulas are added included in a formula-based pricing agreement the versioned snapshot of the formula is included in the agreement. The version of the formula that exists at the agreement's approval will stay with it until it is revised. The versioning of the formulas in an agreement, however, cannot be mass changed without revising each agreement manually. 

Agreement construction without scenarios

Agreements cannot be created without the scenario structure that is described in this use case. This is typically only a small inconvenience as a pricing agreement without concern for scenarios could be built with just one scenario that would achieve the same impact. Forecasts or analysis could still be done on that single scenario. 

Configured products

Any products added to agreements must exist in the product master and have a formula defined at agreement creation time as well as any underlying data needed to calculate price. Creation and pricing of custom configured products or products that do not exist in the product master is not in scope. 

Automated import of existing agreements

A key consideration when creating and setting up agreements in a new system is the management of existing agreements that still have validity or are needed for historical information. Generally, even in the best case, importing agreements from another system is technically complex and difficult. It is not recommended to try to bring in existing agreements from another system except in the most extreme and ideal circumstances. The more complex an agreement structure is, the more complex the process of importing agreements becomes – which makes the exercise far less than ideal for formula-based pricing. Simpler agreements are less complicated, so the only circumstances where attempting this might make sense is for large numbers of very simple agreements. But it’s important to keep in mind that any agreement created automatically would need human validation before being executed. 

Additional data enrichment or maintenance beyond this use case

Any component or other data required to execute pricing calculations, agreement construction or any other functions needed for this use case should be brought into the system in a fully usable format. Data enrichment or maintenance is possible in Pricefx, but that type of capability is largely better served in a master data management or data lake type of system rather than in the pricing system. 

Advanced or additional notifications and alerts

No additional notifications or alerts outside of error handling in the agreement creation. This can be configured for but is not included in the scope of the use case.  

In addition, the following capabilities are not common requirements for formula-based pricing and are broadly out of scope: 

• Any additional reporting and dashboards not included in the core use case requirements 

• Any real time or interactive pricing API integration 

Terms and Definitions