Introduction

This section discusses setting up pricing strategies using the PSP accelerator, specifically focusing on the Cost Plus strategy. It explains how the formula adjustment engine works and how to configure the strategy selection and dependency mapping.

In the video below you will also see how to check and troubleshoot the pricing calculations using the cost table.

Learning Objectives

Core topics and takeaways:

• Understanding how to set up pricing strategies in PSP.

• Learning how to use out-of-the-box pricing strategies and create new ones using the strategy designer.

• Understanding the concept of dependent and independent price lists.

• Exploring the formula adjustment engine and its parameters.

• Learning about strategy selection for different groups of products.

• Understanding how to define and set up custom tables in PSP.

• Exploring data sources for the cost tables.

• Identifying and mapping fields in pricing level configuration.

• Understanding the Cost Plus table and its usage in the system.

• Exploring strategies and troubleshooting processes for finding global base strategies in the data.

Video Highlights

 Learning Highlights

• Set up of pricing strategies:

  • There will be a demonstration of setting up a pricing strategy using the strategy designer.

  • The available strategies are listed, including Cost Plus.

  • Cost Plus is shown twice in the list, with the option to define costs at independent levels.

• Formula adjustment engine:

  • The engine takes three input values: cost, percentage value, and absolute value.

  • There are two ways to perform the calculation: using the absolute or percentage.

  • Additional engine configuration involves a table with other information, such as the calculation mode..

• Strategy selection, base vs non-base strategies:

  • Strategy selection is used to determine which strategies will be used for a particular group of products.

  • Base strategies are listed before non-base strategies and any strategies that fail to calculate will not be mentioned in the list of prices.

  • It is important to consult with the business user to determine the desired strategy and how it will be used in customer configuration.

• Set up cost parameters:

  • It highlights that the data in the table may vary, including different field names.

  • The video mentions the possibility of having multiple cost tables for different regions.

  • It suggests using a setup wizard to configure the cost parameters.

• Data source setup:

  • The data source can be set up in extension tables.

  • The cost table has a label and a technical name.

  • The cost table contains fields for cost, currency, valid from, and valid to.

  • The validity periods in the cost table determine the range of dates for which the cost is valid.

• Price level mapping:

  • The field name and attribute of the pricing level need to be specified in the configuration.

  • The values in the data represent the names of the pricing levels.

  • The dependency mapping requires specifying the field in the cost table that contains the data and the field used to match the values.

  • The configuration can be confusing because the same name is used twice, once for the field in the dependency configuration and once for the field in the data table.

• Cost Plus table:

  • The "Cost Plus" table is used to calculate prices and determine which numbers to use for the calculation.

  • There are two settings in the table: one for absolute values and one for percentages.

  • The "Cost Plus" table is a company parameter and can be found in the company parameters screen.

• Trouble shooting strategies:

  • Troubleshoot data filtering by checking the global base strategies.

  • The cost data is filtered and the list price is used as a lookup, but no results are found due to empty values.

  • The number of products calculated is limited because there is only cost data available for a few products.

Core Learning Concepts

The following are the core learning concepts from this learning path:

Use of PSP package in setting up pricing strategies

The PSP accelerator assists in setting up pricing strategies by providing tools and features to configure and customize pricing strategies based on various parameters such as cost calculations, formula adjustments, strategy selection, and data verification. It offers a platform to define and implement different pricing strategies tailored to specific business needs and goals.

Use of cost plus strategy

The Cost Plus strategy involves setting prices based on the cost, with an additional markup to ensure profitability. In this approach, the cost of the product or service is calculated, and a predetermined profit margin is added to determine the selling price.

It provides transparency in pricing by clearly showing how the final price is derived from the cost. The Cost Plus strategy is commonly used in industries where costs are relatively stable and predictable, allowing businesses to ensure a consistent profit margin on their products or services.

Role of cost plus table

It plays a crucial role in defining and storing cost-related information used in the Cost Plus pricing strategy. It allows users to set up cost calculation formulas, input cost components such as materials, labor, and overhead expenses, and specify profit margins.

This table serves as a central repository for cost data, enabling the system to accurately calculate product costs and determine selling prices based on the Cost Plus strategy. By configuring and utilizing the Cost Plus table effectively, businesses can streamline their pricing processes and ensure profitability by incorporating cost considerations into pricing decisions.

Configure tables and fields for cost calculations

The steps involved in configuring tables and fields for cost calculations in PSP may include:

• Identify the cost components to be included in the calculation, such as materials, labor, and overhead.

• Define the fields in the custom table to store these cost components.

• Set up formulas or calculations within the PSP to aggregate and calculate the total cost based on the input fields.

• Establish relationships between the cost calculation table and other relevant tables for data integration.

• Test the cost calculation functionality to ensure accuracy and reliability.

• Verify that the configured tables and fields accurately capture and calculate costs for products or services in the PSP.

Troubleshoot and verify pricing data

Troubleshooting and verifying pricing data in PSP is essential for various reasons from accuracy of pricing calculations to enabling precise pricing decisions and enhancing profitability and mitigating financial risks.

Moreover, reliable pricing information supports informed decision-making, contributing to strategic business choices. Lastly, operational efficiency is enhanced as data issues are promptly resolved, optimizing pricing processes and system performance.

To effectively troubleshoot and verify pricing data in PSP, you can consider the following steps:

• Review the pricing configuration settings to ensure they align with the intended pricing strategies.

• Check the input data for accuracy and completeness, including cost components and pricing parameters.

• Run test scenarios to validate the pricing calculations and compare the results with expected outcomes.

• Monitor pricing outputs for inconsistencies or errors and investigate any discrepancies.

• Utilize system logs or audit trails to track changes and identify potential issues in pricing data.

• Collaborate with relevant stakeholders to verify pricing data and address any discrepancies or anomalies.

• Implement regular audits and checks to maintain data integrity and ensure the accuracy of pricing information in PSP.

Customizing strategies based on business needs

Customizing strategies based on business needs in PSP involves tailoring pricing approaches to align with specific requirements and objectives. This customization allows businesses to adapt pricing strategies to unique market conditions, product offerings, and customer segments. Customization may include defining pricing tiers, applying discounts, setting dynamic pricing rules, or incorporating promotional strategies.

This flexibility enables businesses to respond effectively to market dynamics, customer preferences, and strategic goals.

How to customize strategies to align with requirements

Strategies can be customized in PSP to align with specific business requirements in various ways:

• Pricing Parameters: Adjusting pricing parameters such as cost components, profit margins, and pricing rules to reflect unique business cost structures and profit goals.

• Segmented Pricing: Implementing segmented pricing strategies based on customer groups, geographical regions, product categories, or purchasing behavior.

• Promotional Pricing: Customizing promotional pricing rules, discounts, and offers to drive sales and customer engagement.

• Dynamic Pricing: Setting up dynamic pricing mechanisms that respond to market conditions, competitor pricing, and demand fluctuations.

• Price Optimization: Utilizing data analytics and optimization tools within PSP to fine-tune pricing strategies for maximum revenue and profitability.

• Product Bundling: Creating bundled pricing strategies to promote complementary products or services and increase customer value perception.

• Seasonal Pricing: Adapting pricing strategies seasonally to capitalize on peak demand periods or off-peak seasons.

Quiz

Test your knowledge of this section, here.