Price Rules and Discounts
The price for an item might vary depending on the quantity that you purchase. For example, if you purchase one clock, the price might be 5.00. If you purchase 100 clocks, the price for each clock might be 4.00. When you enter an item in a catalog, you can specify price breaks based on the quantity that you purchase.
You might receive a discount on an item based on the quantity that you purchase. For example, if the price for an item is 5.00, you might receive a 20 percent discount if you purchase 100 items and a 30 percent discount if you purchase 200 items. You can have the system apply a discount to the unit cost of an item when you enter a purchase order.
You must create inventory price rules to provide discount information. For each price rule, you must specify:
The quantity you must purchase.
The discount you will receive (percentage, monetary amount, or flat rate) based on each purchase quantity.
Effective dates for each discount.
A price rule can apply to a single item or multiple items. For example, you can set up a price rule that applies to a specific office supply or a group of office supplies. After you create a price rule, you must attach it to the items to which it applies and the supplier from whom you purchase the items.
You can create multiple levels for a price rule, each of which represents a certain purchase quantity. For example, you might set up these levels:
Level one – 20 percent discount for the purchase of up to 100 items.
Level two – 30 percent discount for the purchase of 101 to 200 items.
Level three –flat rate for the purchase of 201 items to 1,000 items.
If you enter a purchase order for a supplier and item to which you have attached the preceding rule, the system applies a discount to the unit cost of the item based on the quantity that you purchase. For example, if the cost of the item is normally 10.00 and you purchase 150 items, the system calculates a unit cost of 7.00.
A supplier might provide you a discount on a specific item up to a maximum purchase limit. For example, you might have an agreement to purchase up to 200 hammers at a special price of 4.00 each. After you purchase 200 hammers, the price returns to normal. You can create a contract price rule to cover this type of discount.
You create a contract price rule the same way that you create a standard price rule, except that you must:
Specify that the rule is a contract price.
Name the rule after the short item number to which the rule applies.
Indicate the number of items you can purchase at the contract price.
You do not need to attach the contract price rule to the item. The system retrieves the contract price based on the short item number when you enter a purchase order.
If you create a contract price rule for an item, the price that you specify will override all other price rules that are applicable to the item.
The system tracks the quantity that has been purchased against the contract price rule to date.