Configure Cost Plus Pricing Strategy

This article explains how to set up Cost Plus pricing strategy in the Price Setting accelerator using the out-of-the-box features.

Prerequisites

Before you start, ensure you know the following:

• Which Cost+ method for calculation you will use. Review the available methods in Adjustment Engine article.

• What part of the business will be priced by this strategy:

  • Pricing Levels

  • Product Segments

• Storage and structure of the Cost data table:

  • The cost data must be stored in a table type supported by the Price Setting accelerator (e.g. Product Extension).

    • When you store the cost data in more tables per Pricing Level, make sure you have consistent naming pattern for the tables. The name must consist of 2 parts:

      • Pricing Level attribute value – Usually the Pricing Level name, but it could also be the Dimension value, or Preference1 value, etc.

      • Name of the Cost Table – This part of the name must be the same for all the Cost tables.

  • Be familiar with contents of table fields, to understand which fields store the product ID, pricing level attribute (if used), cost money amount, cost currency, validity range of the cost.

    • Find out if you have different Cost amount values for different Pricing Levels’ attribute (e.g. per Pricing/Dependency Level name, dimension, preference1, …).

Open

Example of a single Cost table with costs different per Pricing/Dependency Level Name and different validities.

Review Data Tables

1. Review the Cost table/s to know the field’s names and labels, and to know what data are in these tables.

2. Review the Company Parameters with names ending with “StrategySelection”. For new projects you will see several out-of-the-box tables to help you start, and in existing projects you will see how the project was managed until now.

3. Review the Company Parameters with names ending with “CostPlus”. For new projects you will see several out-of-the-box tables to help you start, and in existing projects you will see for which Pricing Levels and for which Product Segments the Plus factors were defined (if at all).

Select a Pricing Strategy for Price Calculations

1. Review the article Select Pricing Strategies used for Calculation of Prices.

2. Decide on which Pricing Level you need to do the modification. Based on that, identify the proper “*StrategySelection” table to modify.

3. Add/modify records in that table for a specific combination of the ProductSegment for which you want to use Cost+ pricing strategy.

4. Set up the “Cost+” strategy for specific Product Segment combination or on “star” level.

5. Set up the proper priority of your pricing strategy – as first, second, etc. for the Product Segment.

Configure the Source of Cost Data

1. Navigate to Company Processes › Price Setting Accelerator Configuration Wizard.

2. Select Core Elements module for configuration.

3. Click Configure Cost Data Source.

4. Set Data Source Properties.

   • Choose the table type for storing Cost data, e.g., select "Product Extension.".

   • Specify the table containing Cost data, e.g., choose "ProductCost."

   • Indicate the field storing the Cost money amount, e.g., select "Cost."

   • Specify the field containing currency symbol information, e.g., choose "Currency." Leave empty if not available.

   • If your dataset includes validity dates for Cost, enter the field name which contains the “Valid From” date. Optionally, define the field name for "Valid To".

5. Set Dependency Mapping Properties.

   1. Choose how data are stored:

      • Select "None" if there are no different Cost amount values for various Pricing Levels attributes (e.g., Pricing Level name, dimension, preference1, …).

      • Select "Table" if Costs are stored in separate tables per Pricing Level.

      • Select "Lookup" if Cost data for different Pricing Levels are stored together in a single table, distinguished by a field value.

   2. Select a field from Pricing Level.

      • For "Table" or "Lookup" options, specify which Pricing Level property/field distinguishes between tables (for "Table") or records (for "Lookup") containing cost information for the same product but for different Pricing Levels. For example, distinguish cost data by Pricing Level Name, Dimension, Preference1, etc.

   3. Select a field from the cost data table.

      • For "Lookup" option, specify which field in the cost table distinguishes cost records for the same product but different Pricing Levels.

Configuration Tables

Once you finish the wizard, the settings are stored in Company Parameters “PriceSettingConfig” and “DependencyMappingConfig”.

Open

Example of Dependency Mapping mechanism when costs are stored in single table, but differentiated per Pricing/Dependency Level name.

Select Price Calculation Formula

The out-of-the-box Cost+ strategy can calculate the result price in several ways – Absolute, Percentage and SellingPrice. Review the actual calculation formulas in Adjustment Engine which is used to calculate the Cost+ strategy.

To decide which of the formulas (and thus also which field of the CostPlus table) will be used, do following:

1. Change the “Calculation Mode” setting found in Company Parameter “CostPlusAdditionalConfig”.

Configure Plus Factors

As a final step, you need to set up the “Plus” for calculation of the Cost+ strategy. See article Update Cost Plus Adjustment (Price Setting).