Margin Adjustments

The CSR can quickly and easily manipulate the sales order or the quotation to meet specific prices and achieve specific margins to secure additional customer business, as well as meet overall budgetary margin goals. The CSR can do margin adjustments online for individual orders or use a process to access a range of orders, customers, and products. PeopleSoft Enterprise Pricer performs the initial pricing for the order.

The ability to adjust margins on the sales order is controlled by a setting on the Order Entry Feature page. Because it is such a powerful feature, you control the ability to adjust margins using Feature Function security. You may decide to let all of your CSRs view the margin adjustment information, but allow only certain CSRs the ability to change the margin on the sales order or even refine it further by letting them only make adjustments on the Order Entry Form page.

The products that you can update using margin manipulation are controlled by a setting on the Product Options page. You can add a value for an alternate cost adjustment factor in cases in which you want to add additional costs to the unit cost. These options are available on the Product Options and Product Group Table page. You can additionally set up exceptions to the alternate cost by Inventory or Order Management business unit for pricing product groups.

The default order to determine the Alternate Cost Adjustment Factor is:

  1. Product value.

  2. Product group value.

  3. Inventory business unit or the Order Management business unit from the Product Group Exception List from the product group.

    Note:

    If two conflicting override values exist, the higher of the two values is used. For example, you may have the adjustment factor of the Order Management business unit as 20 percent and that of the Inventory business unit as 18 percent. The system would use the Order Management business unit value in this example.

You also determine whether you want adjustments made to the product or product group. The Pricing Option field controls whether you can change the price of the product or product group. Values are:

  • KVI (known value item): Designated products or groups of products for which the selling price cannot be reduced or increased.

  • NDP (nondiscountable product): Designated products or groups of products for which the selling price cannot be decreased, but can be increased.

  • Regular: Prevents the setting from overriding or being applied to a product. For product groups, indicates that the product group is neither NDP nor KVI.

Note:

The system retrieves the product value first. If none exists, it retrieves the product group value for the default pricing group if any is associated with the product.

Changing Margins on the Sales Order

If your CSR can change margins on the sales order based on his Feature Function security settings, he can change the net unit price at these levels: line, schedule, order (part or entire), section, and use of a worksheet process for a range or orders. Sections enable you to group logical order lines and schedules together to make changes to the price. The worksheet enables you to change the prices for the entire order. The CSR can use the worksheet to try various price changes to achieve the result that the customer wants.

Changing the prices using margin manipulation is a powerful feature. These adjustment types can be used from the line, schedule, worksheet, or process:

  • Adjust cost for price: Cost plus pricing.

  • Adjust extended amount – Adjust the total amount for the line.

  • Calculate a new net unit price— Change list price ID and net unit price.

  • Adjust margin amount — Adjust margin by amount.

  • Adjust margin percent — Adjust margin by percent.

  • Adjust net unit price — Override net unit price.

  • Set price protect only — Set price protection. This type is not available from the line.

You can make the actual margin adjustments using three methods at every level—line, schedule, worksheet, or process:

  1. Replacing the price or margin.

  2. Using a formula to calculate the price or margin.

  3. Using the adjustment type, adjust by, and adjustment amount to specify the adjustments.

See Margin Adjustments.

If the products have a minimum selling price or minimum or maximum margins set up, the CSR will receive a warning message if these settings are violated by the changes. Depending on your hold processing parameters, the lines may also go on hold.

The new price information appears on the Line Pricing Data and Schedule Pricing Data pages along with the unit and alternate cost information.

Adjusting the margins changes the price and requires a reason code. You can set a default value at the Order Management business unit on the Order Management Setup page or the user preferences pages for quotes and orders.

Adjusting Margins with Claimbacks

If the sales order line or schedule is associated with a claimback, the margins take into consideration the value of the Margin Impact field on the claimback. The values are:

  • Primary Only: The margin calculation for the normal unit cost is updated to subtract the computed claimback amount from the unit cost to increase the margin percent.

  • Secondary Only: The margin calculation for the secondary alternate unit cost is updated to subtract the computed claimback amount from the secondary unit cost to increase the margin percent.

  • Both: The margin calculations for both the primary unit cost and the secondary unit cost are updated to subtract the computed claimback amount from the unit cost to increase the margin percent.

  • Neither: The claimback amount has no impact on either the primary or secondary unit cost margin calculation.

You many need to perform a unit of measure (UOM) conversion to determine the correct claimback amount to be applied to the margin calculation if the claimback contract UOM is different from the selling UOM.

See Understanding PeopleSoft Claimbacks

Using Formulas in Price Adjustments

Depending on your business scenario, you can do price adjustments using formulas. The system recognizes these symbols for formulas:

Symbol Description

A, MARGIN AMOUNT, or AMOUNT

Gross profit (margin amount)

M, MARGIN PERCENT, or PERCENT

Gross profit margin (margin percent)

L or LIST

List price as defined by the default price list

C or COST

Cost as defined by the cost base

N or NET UNIT PRICE

Net unit price as previously calculated or displayed in the worksheet

T or TOTAL

Total Price
Symbol Meaning

+

Addition

–

Subtraction

X, x, or *

Multiplication

/

Division

=

Equals
Symbol Meaning

$, £, or €

Amount indicator (USD, British pound, euro)

%

Percentage indicator (this is the default if no other indicator is used)

Note:

If no equal sign (=) appears, then N= is assumed. If no value indicator used, then percent is assumed.

Formulas can have only one adjustment type, one operator, and one value indicator. If no equal sign (=) is used, then N= is assumed for cost, list price, and net unit price calculations. If no value indicator is used, then percent (%) is assumed except for division calculations.

Formula Interpretation

L – 5, L – 5%, L – %5

List price minus 5 percent

C+$.05, C+.05$

Cost plus .05

A*1.10

Increase margin amount by 10 percent

M+5, M*1.05, M+5%

Increase margin percent by 5 percent

T=$45

Set total price to equal 45.00

N=$4.95, N=4.95$

Replace price, set net unit price equal to 4.95

M=45, PERCENT=45

Set worksheet margin percent to 45 percent

Margin Adjustment Scenarios

This section describes the steps to create total price and margin percent adjustments after your customer places an order with your CSR. Ensure that you have set up the prerequisites so that your CSR can make margin adjustments.

See Establishing Prerequisites for Margin Adjustments.

In the first scenario, your customer places an order and the total order amount comes to 5800.00 USD. Your customer wants to receive the goods for 5500.00 USD and the CSR makes the change to offer them the requested price because they are an outstanding customer. To create a total price adjustment, complete these steps in the Cost Summary section of the Order Entry Form page after entering products to the order:

  1. Enter a reason code for the change.

  2. Select Adjust Extended Amount in the Adjustment Type field.

  3. Enter Amount in the Adjust By field.

  4. Enter minus 300.00 USD (–300.00) in the Amount field.

  5. Click the Adjust Order Margins button to make the change to the entire order.

  6. (Optional) Select the Set Price Protection flag to prevent the items from being further changed.

  7. Save the order.

In the next scenario, the CSR will decrease the margin for a section of the order by 5% after entering the products and assigning them a Section to give the customer a better price.

  1. After entering an order, create a section for the products that the customer wants a better price for. Enter the section on the Margins tab.

  2. In the Sections Total, click the Load Sections button.

  3. Select Adjust Margin Percent in the Adjustment Type field.

  4. Enter Percent in the Adjust By field.

  5. Enter minus 5 percent (–5) in the Amount field.

  6. Click the Adjust Section Margins button to make the change to the section.

  7. Save the order.

Note:

Remember to check the price protected option and whether the products are NDP or KVI if you do not get the changes you want when making adjustments.

Margin Adjustment Calculations

Adjustment Type Adjust By: By Amount Adjust By: By Percent Adjust By: To Equal

Adjust Cost for Price

Net Unit Price = Cost + Adjust Amount

Net Unit Price = Cost * (1 + (Adjust Amount / 100))

Net Unit Price = Adjust Amount

Adjust Extended Amount

(Note 1)

Extended Amount = Extended Amount + Adjust Amount

Extended Amount = Extended Amount * (1 + (Adjust Amount / 100))

Extended Amount = Adjust Amount

(Note 2)

Adjust List Price

Net Unit Price = List Price + Adjust Amount

Net Unit Price = List Price * (1 + (Adjust Amount / 100))

Net Unit Price = Adjust Amount

Adjust Margin Amount

(Note 1)

Margin Amount = Margin Amount + Adjust Amount

Margin Amount = Margin Amount * (1 + (Adjust Amount / 100))

Margin Amount = Adjust Amount

(Note 2)

Adjust Margin Percent

(Note 1)

Margin Percent = Margin Percent + Adjust Amount

Margin Percent = Margin Percent * (1 + (Adjust Amount / 100))

Margin Percent = Adjust Amount

(Note 2)

Adjust Net Unit Price

Net Unit Price = Net Unit Price + Adjust Amount

Net Unit Price = Net Unit Price * (1 + (Adjust Amount / 100))

Net Unit Price = Adjust Amount

(Note 2)

Set Price Protect Only

(Note 3)

(Note 3)

(Note 3)

Note 1: Adjusting the Margin Amount, Margin Percent, or Extended Amount values causes the Net Unit Price to be recalculated for each of the order lines or schedules included in the Margin Amount, Margin Percent, or Extended Amount.

Note 2: Selecting the Net Unit Price, Margin Amount, Margin Percent, or Extended Amount fields on the page and directly replacing the value is equivalent to using the Adjust By: To Equal technique shown here.

Note 3: Set Price Protect Only selects the Price Protect check box for the targeted rows. It does not adjust any other values.