Setting Up Base and Standard Pricing

This chapter provides an overview of pricing and discusses how to:

• Set up a base pricing structure.

• Set up bases prices.

• Set up complex price groups.

• Set up standard price adjustments.

Understanding Pricing

For each item that you want to sell, you must define the price at which you want to sell it. You use JD Edwards EnterpriseOne Sales Order Management pricing to define the base prices that the system retrieves when you enter items on a sales order.

You can set up a pricing structure before you define base prices. The system uses this pricing structure to retrieve base prices. The base price structure must be flexible enough to accommodate the pricing schemes that you set up for various combinations of items and customers. You can set up customer groups and item groups and assign prices to any combination of items, item groups, customers, and customer groups. You define a hierarchy to determine how the system searches for prices.

After you establish a base price, you can set up additional types of price calculations, such as:

• Price adjustments for groups of items.

• Contract pricing, which applies special pricing for an item to a single customer or customer group.

• Trade discount pricing, which is a discount percentage on all items for a specific customer.

This process flow illustrates how the system calculates prices:

Calculating prices

Pricing can be based on the Parent, Ship To, or Sold To address. You can define base prices with effective dates so that you can define prices for future use or for limited time promotions and specials. You can also define credit prices to use when items are returned.

To provide greater flexibility in the pricing structure, you can define complex customer and item groups. Within each customer or item group, you can create subgroups based on specific address book category codes and item category codes.

After you define base prices, you can update them as needed (for example, to change a price or create a price that will be effective on a future date). You can use the Base Price Revisions program (P4106) to update base prices individually. Or you can run the Base/Price Maintenance - Batch program (R41830) to update multiple prices at one time.

You use the Sales Order Batch Price/Cost Update program (R42950) to update prices for a customer. You can also use this program to update the unit and extended costs of items on sales orders with the most current costs. If multicurrency processing is activated in the system, the system also updates the Foreign Unit and Extended Costs fields.

Setting Up a Base Pricing Structure

This section provides an overview of base pricing structure, lists prerequisites, and discusses how to:

• Assign a customer pricing group to a customer.

• Assign an item pricing group to an item.

• Set up the pricing hierarchy.

Understanding Base Pricing Structure

For each item that you sell, you can define the base price at which you want to sell it. The system retrieves this price when you enter an item on a sales order.

You can define the base price for an item or any combination of items, item groups, customers, or customer groups. To simplify the process of defining and maintaining base prices, you can set up price groups for customers and items with similar characteristics.

When the system retrieves prices, it uses the hierarchy for the Base Price Preference (51) to determine the order in which the system searches for base price records. If you create item and customer groups, you can define the search sequence of the Base Price Preference Hierarchy so that the system searches item and customer group combinations as well as item and customer combinations.

Note. 51 is the actual hierarchy value. You must use this hierarchy for base pricing.

Customer Price Groups

You set up customer price groups to apply pricing schemes to specific groups of customers. Price groups are an optional way of organizing pricing schemes. You can set up customer price groups to enter and update price information for multiple customers at once rather than individually.

For example, you can create a customer price group for preferred customers, named PREFER, who can purchase a bike for 420.00 USD, while other customers buy the bike at 450.00 USD.

A simple price group is a group of customers that are assigned to the same group name in the customer billing instructions. In Base Pricing, a customer can belong to only one customer price group.

To allow for greater pricing flexibility, you can set up complex customer price groups. Complex price groups are groups of customers that are assigned to a group name, but might be part of a different subgroup. You can define subgroups in a complex price group with values that you assign to category codes such as customer geographic location, line of business, or sales volume.

With complex price groups, customers can belong to the same group but have different prices based on category codes, such as geographic location.

In JD Edwards EnterpriseOne Advanced Pricing from Oracle, a customer can belong to a customer group without being attached to that group in customer billing instructions. A customer can belong to numerous groups, depending on the customer's category codes.

Item Price Groups

Item price groups are similar to customer price groups. You set up item price groups so that you can define base price information for a group of items rather than for many items on an individual basis.

You can set up item price groups to enter and update price information for multiple items rather than updating items individually. For example, you can group similar bikes of different colors, named BIKES, and define one price for this group.

A simple price group is a group of items that are assigned to the same group name in the Item Master (P4101) or Item Branch (P41026). In Base Pricing, an item can belong to only one item price group.

To allow for greater pricing flexibility, you can set up complex item price groups. Complex price groups are groups of items that are assigned to a group name, but might be part of a different subgroup. You can define subgroups in a complex price group with values that you assign to category codes, such as commodity class or item pool code.

With complex price groups, items can belong to the same group but have different prices based on category codes, such as commodity class.

In JD Edwards EnterpriseOne Advanced Pricing, an item can belong to a detail group without being attached to that group in Item Branch. An item can belong to numerous groups, depending on the category codes.

Pricing Hierarchy

When the system retrieves the base price, it uses the hierarchy that you set up for the Base Price Preference (51) to determine the sequence with which it searches base price records. The base price hierarchy is a matrix comprising combinations of customers and items and customer and item price groups. You use the intersection of the rows and columns to determine the sequence with which the system retrieves the base price.

You should set up the pricing hierarchy from most specific pricing to most general pricing.

This example illustrates a most specific item/customer pricing hierarchy:

Example of a preference hierarchy

Important! You can enter up to 14 numbers in the preference hierarchy. However, we recommend that you limit hierarchy to as few numbers as necessary. Each number represents a search by the system through the Item Base Price File table (F4106). Therefore, each number that you add to the hierarchy increases the system processing time.

Prerequisites

Before you complete the tasks in this section:

• Verify that you have set up Customer Price Groups in user-defined code (UDC) 40/PC.

• Verify that you have set up Item Price Groups in UDC 40/PI.

Forms Used to Set Up a Base Pricing Structure

Assigning a Customer Pricing Group to a Customer

Access the Billing Information form.

Customer Price Group

Enter the name of the customer group to which you want to add this customer.

Assigning an Item Pricing Group to an Item

Access the Additional Info tab on the Item Branch/Plant Info form.

Setting Up the Pricing Hierarchy

Access the Preference Hierarchy Revisions form.

Enter consecutive numbers at the intersections of rows and columns to define the base pricing hierarchy (51).

You can enter up to 14 numbers in the preference hierarchy. However, we recommend that you limit hierarchy to as few numbers as necessary. Each number represents a search by the system through F4106. Therefore, each number that you add to the hierarchy increases the system processing time.

For example, if you want the system to first search for pricing information for an item number based on the customer's sold-to address, enter 1 in the Item Number column next to the Sold To Customer Number field. If no price has been set up at this level, the system performs another search using the parameters that are associated with the value 2.

Setting Up Base Prices

This section provides an overview of base prices, lists a prerequisite, and discusses how to set up base prices.

Understanding Base Prices

When you enter an item on a sales order, the system retrieves the base price information for that item. You can define base prices for any combination of items, item groups, customers, or customer groups.

When you enter an item in the F4101 table, you should enter the sales price level. The sales price level determines how you define the base price for an item. This table describes the levels at which you can define prices:

When you define any special pricing or discounts for an item or customer, the system bases the calculation of the discounted price on the base price.

You can assign effective dates when you define the base price for an item. If you do not assign effective dates, the system will assign them. You also specify the sales price based-on date in the system constants to determine which date on the sales order to compare to the effective dates. The sales price based-on date can be the promised date, the order date, or the date that you define in the system constants. The system retrieves the price whose effective date range includes this sales price based-on date.

You can also use effective dates to enter a new price while an old price is still in effect. For example, you can overlap the dates for the base price and the dates for a discount price that you are offering for a limited period. When you set up date ranges that overlap, the system retrieves the price that expires first.

For every price, you can also define a credit price to use for negative quantities.

You can use JD Edwards EnterpriseOne Sales Order Management pricing to add prices for items in the domestic currency and as many other currencies as necessary. For example, you can set up base prices for one item in U.S. dollars and the euro. Currency code and unit of measure are both keys to the F4106 table. If you are using multicurrency, the system searches for a price in this sequence:

1. Customer's currency and the user-specified unit of measure.

2. Customer's currency and the item's primary unit of measure.

3. Domestic currency and the user-specified unit of measure.

4. Domestic currency and the item's primary unit of measure.

If the system does not find a match, it moves to the next level in the pricing hierarchy structure and searches in the same sequence.

You can copy base price information for an item that belongs to an item group. The system duplicates pricing information but does not duplicate the item group information.

Prerequisite

Verify that the pricing hierarchy has been defined.

See Defining a Pricing Hierarchy.

See Also

Generating New Base Prices in a Different Currency

Forms Used to Set Up Base Prices

Setting Up Base Prices

Access the Base Price Revisions form.

Customer Price Group	Enter a UDC (40/PC) that identifies a customer group. You can group customers with similar characteristics, such as comparable pricing.
Item Price Group	Enter a UDC (40/PI) that identifies an inventory price group for an item. Inventory price groups have unique pricing structures that direct the system to incorporate discounts or markups on items on sales and purchase orders. The discounts or markups are based on the quantity, monetary amount, or weight of the item that is ordered. When you assign a price group to an item, the item takes on the same pricing structure that is defined for the inventory price group. You must assign an inventory price group to the supplier or customer, as well as to the item, for the system to interactively calculate discounts and markups on sales orders and purchase orders.
Adjust Prices By:	Enter the amount by which you want to adjust a price. You must also select any of these options to indicate which prices to update, and which method to use: Unit Price Credit Price Percentage Amount
Unit Price	Select to update the unit price columns. Clear the Unit Price check box to prevent the unit price from being updated.
Credit Price	Select to update the credit price column. Clear the Credit Price check box to prevent the credit price from being updated.
Percentage	Select to indicate that the factor value is a multiplier (percentage) when applied to an order's price. For example, if you want to adjust a price by five percent, enter 5 in the Adjust Prices By field, and select this option.
Amount	Select to indicate that the value by which you are adjusting a price is an amount, rather than a percentage. For example, if you want to adjust a price by 5 USD, enter 5 in the Adjust Prices By field, and select this option.

Setting Up Complex Price Groups

This section provides an overview of complex price groups, lists a prerequisite, and discusses how to:

• Set up complex price groups.

• Assign a customer to a price group.

• Set up complex item groups.

• Assign an item to an item group.

• Generate price group relationships.

Understanding Complex Price Groups

To allow for greater flexibility in the pricing structure, you can define complex customer and item groups. Within each customer or item group, you can create subgroups based on attached category codes, such as specific item type, customer geographic location, line of business, or sales volume.

Customer Groups

You can set up complex customer groups to provide greater flexibility in the pricing structures. You can use up to 10 category codes to set up complex customer groups.

The category code sequence that you enter determines how the system displays the category code fields on the related forms. The order in which you select category codes does not affect how the system searches for prices.

You can make changes to the category codes for a price group that has already been assigned to customers; however, if you change the customer price group definition, you must run the Generate Customer Price Groups program (R40932) to update the price group relationships in the F4093 table.

Item Groups

You can also set up complex item groups to provide greater flexibility in the pricing structures. You can use up to 10 category codes to define complex item groups.

For example, if you have two types of pens (marker and ballpoint) within the group PENS, you can specify a different price for each type of pen. When you enter an order for pens, the system checks the category codes that are assigned to the item to determine whether the pen is a marker or a ballpoint and then retrieves the appropriate price.

The category code sequence that you enter determines how the system displays the category code fields on the related forms. The order in which you select category codes does not affect how the system searches for prices.

If you make changes to the category codes for a price group that has been assigned to an item, you run the Generate Item Price Groups (R40931) program to update the price group relationships in the F4093 table.

Note. You can define up to 10 category codes for each group definition.

After you create complex price groups and attach the group name to the customer, you can generate price group relationships.

Price Group Relationship Generation

After you set up price groups and assign the group names to customers and items, you can also generate customer and item price group relationships. You generate price group relationships to define the possible combinations of customer and item groups to use for pricing.

You use two batch programs to generate price group relationships:

• Generate Customer Price Groups (R40932).

• Generate Item Price Groups (R40931).

These programs generate records in the F4093 table, which contains the allowable combinations for customer or item groups and category codes.

After you generate price group combinations, the system produces a report indicating any errors. A blank report indicates that no errors occurred during the generation process.

Prerequisite

Verify that you have set up Customer Price Groups in UDC 40/PC.

Forms Used to Set Up Complex Price Groups

Setting Up Complex Price Groups

Access the Customer Price Group Definition form.

Price Group

Enter a code (40/PC) that identifies a customer group. You can group customers with similar characteristics, such as comparable pricing.

Assigning a Customer to a Price Group

Access the Billing Information form.

Setting Up Complex Item Groups

Access the Item Price Group Definition form.

Assigning an Item to an Item Group

Access the Item/Branch Plant Info form.

Select the Additional Info. tab.

Generating Price Group Relationships

Access the Generate Price Group programs from the Price Management menu (G4222).

1. To generate customer price group relationships, select Generate Customer Price Groups (R40932).

2. To generate item price group relationships, select Generate Item Price Groups (R40931).

Setting Up Standard Price Adjustments

This section provides an overview of standard price adjustments, lists prerequisites, and discusses how to:

• Set up standard pricing adjustments.

• Set up inventory pricing rules.

• Assign pricing rules to customers and customer groups.

• Set up trade discounts.

Understanding Standard Price Adjustments

After you define base prices, you can set up these types of price adjustments:

• Price adjustments for groups of items.

• Contract pricing, which applies special pricing for an item to a single customer or customer group.

The system prices an order in this sequence:

1. Any item price that you enter in the order overrides the base price that the system retrieves.

   You can set processing options in Sales Order Entry (P4210 or P42101) to protect the sales order detail price fields as well as price related fields.

2. A trade discount that you define through customer billing instructions overrides all other pricing or repricing.

3. A contract price for a specific customer takes precedence over a contract price for a group of customers.

   It also overrides other inventory pricing rules. If a contract price for a specific customer does not exist, the system searches for a contract price for a customer group.

4. The system retrieves inventory pricing rules for a specific customer, if you have defined them, before it retrieves rules that are defined for a group of customers.

5. If you do not define trade discounts, contract prices, or inventory pricing rules, the system retrieves the base price.

Inventory Pricing Rules

You define pricing rules to set up a pricing scheme for an item or a group of items. An inventory pricing rule is a pricing rule that defines a price and quantity for a customer or customer group. For each item or item group, you define levels of pricing. You can determine price breaks by quantity. You can indicate whether the price adjustment is a markup or discount. You can set up contract prices to guarantee a price for a particular customer. You can also enter a price to override the base price for a specified period.

The system does not adjust prices until you assign a customer or customer group to an inventory pricing rule.

When you define inventory pricing rules, you enter the user-defined codes that you previously set up for item price groups. To create new user-defined codes for item price groups, you can select Price Management (G4222), Setup Inventory Pricing Groups.

Trade Discounts

A trade discount is the simplest way to offer a discount to a customer. The system applies the discount to all items that are sold to the customer. The trade discount overrides all other pricing. If a trade discount exists for a customer, the system does not apply any other discounts. You set up trade discount pricing through the customer billing instructions. You enter a flat percentage that the system applies to the order total.

Note. Trade discounts do not function with configured items that are entered on a sales order.

Contract Pricing

You can set up contract prices to guarantee a price for a particular customer. When you enter an order for a contract item, the system checks the remaining quantity to be sold at the contract price.

If the quantity on the order exceeds the remaining quantity allowed, the system writes two lines on the order:

• One line for the quantity at the contract price.

• One line for the quantity at the regular price.

You set up contract pricing by defining an inventory pricing rule and assigning the rule to a customer.

Note. You must use the item's short ID number in UDC table 40/PI to identify the pricing rule.

Prerequisites

Before you complete the tasks in this section:

• Verify that item price groups have been set up.

• Verify that customer price groups have been set up.

• Verify that you have set up item price group pricing rules in UDC 40/PI.

See Also

Understanding Base Pricing Structure

Forms Used to Set Up Standard Price Adjustments

Setting Up Standard Pricing Adjustments

Access the Customer Pricing Rules form.

Level	Enter an alphanumeric code that determines the sequence in which the system displays the rules within the pricing group. You define levels when you set up the pricing groups.
Up To Quantity	Enter the volume or quantity breaks that are commonly used in pricing tables. If the quantity on the first level of a rule is 5, then the pricing logic on this level applies only to sales of five or fewer items. If the quantity in the next level is 10, then the pricing logic applies to sales of 6 through 10 items. 99,999,999 indicates all quantities.
Basis	Enter a costing method on which the system bases the net price of the order. For pricing and repricing, values are: 1: Last-In Cost 5: Future Cost P: Unit Price 2: Average Cost 6: Lot Cost 3: Memo Cost 1 7: Standard Cost 4: Current Cost The system uses the method that you enter here to determine the order's net price. Otherwise, specify a value from 1 to 8 to use the unit cost in the sales detail as the base-on value for all reprice calculations.
Factor Value	Enter the discount that the system uses when it calculates the price of an item that is attached to this inventory pricing rule. Discounts can be expressed as multipliers, additional amounts, or deductible amounts. For example, a 10 percent discount would be expressed as .90. You can use the same factor for markups over cost. For example, a 10 percent markup would be expressed as 1.10.
Type	Select a value that indicates whether the factor value is a multiplier (percentage) or an additional/deductible cash amount ($) when applied to an order's price.
Override Price	Enter a price. Any price that you enter here overrides all other rules or prices.
Base UOM (base unit of measure)	Enter a code that indicates that the quantity limit is based on a special unit of measure. The default value is 1 (primary unit of measure). Values are: 1: Primary unit of measure. 2: Secondary unit of measure. 3: Purchasing unit of measure. 4: Pricing unit of measure. 5: Shipping unit of measure. #: Weight. $: Monetary (not quantity) limit.
Contract Quantity	Displays the quantity that is established in the inventory pricing rules as the number of items that the customer can purchase at this contract price.
Quantity Taken	Displays the number of units that have passed through the Sales Update process. In Work Order Processing, this field identifies the total quantity that is completed or consumed on a work order to date basis.
Contract Reference	Enter the number or identifier of the document on which this contract is based. Complete this field only if you are creating a contract price between you and a specific customer.

Setting Up Inventory Pricing Rules

Access the Work With Pricing Rules form.

1. Click Add.

2. Complete the required fields, along with any of the optional fields that are necessary to the business, on the Inventory Pricing Rules form:

   • Pricing Rule

   • Price Method

   • Level

   • Basis

3. To review item information, select Detail from the Row menu.

   Click Close when you are finished reviewing item information to return to the Inventory Pricing Rules form.

4. Click OK to save the information and quit the program.

Assigning Pricing Rules to Customers and Customer Groups

Access the Work With Pricing Rules form.

1. Click Add.

2. On Inventory Pricing Rules, complete the these fields to identify the pricing rule that you want to apply to a customer or customer groups:

   • Pricing Rule

   • Price Method

3. Select Customer Rules from the Form menu.

4. On Customer Pricing Rules, specify the customer or the customer group in one of these fields:

   • Customer Price Group

   • Customer Group/Number

5. Select the pricing level, and then select Apply Level from the Row menu.

Setting Up Trade Discounts

Access the Billing Information form.