How Observed Standalone Selling Prices Are Calculated

Revenue Management groups the calculated observed standalone selling prices into observed standalone selling price value sets based on the effective period and the item classification. Consider the following:

• The Item classification identifies the goods and services, such as hardware, software, hardware support, or software support.
• The Effective Price Period is the range of dates when the standalone selling prices are valid.
• The Coverage Period is the date range of the qualified standalone sales that were included in the observed standalone selling price calculation. It may or may not be overlapping with the Effective Price Period, depending on your company policy.

You can exclude certain categories of standalone sales from observed standalone selling price calculation, such as internal sales, and then rerun the calculation to see how this immediately impacts your observed standalone selling prices.

You can review the individual observed standalone selling prices within a data set and make the decision to establish or not to establish the price for the data set. The application provides the following data points for each observed standalone selling price:

• The standalone sales transactions used to calculate the observed standalone selling price. This pool is referred to as Qualified Standalone Sales. Note that any revenue contract that contains only one performance obligation is considered a standalone sale.
• The standalone sales excluded from the qualified standalone sales pool and the exclusion reason.
• The pricing dimension values. A product can have multiple prices depending on factors like the profile of the customer, the value purchased, the geographic region, and where the product is sold. These factors are configured as pricing dimension values. Observed standalone selling prices for a product are computed separately for each pricing dimension value combination.
• The standalone selling price profile used. The standalone selling price profile defines the criterion that a valid observed standalone selling price should satisfy, such as the minimum number of standalone sales lines required to compute an observed standalone selling price.
• The observed standalone selling price for the previous effective period for comparison.

The observed standalone selling price calculation results in the following:

• Observed price status:
  • Suggested Valid status indicates the value met the criteria of the standalone selling price profile.
  • Suggested Invalid status indicates the value didn’t meet the criteria of the standalone selling price profile.
• Statistical information for the standalone selling price value, such as the median, tolerance range coverage, and sales count.
• Two analytical graphs for reviewing the calculation: The bell-curve distribution and the trend analysis. These two graphs provide you with insight into the nature of sales being included in the calculation.

Based on the observed price status, you can choose to either establish or not to establish the value. Once the observed standalone selling prices have been automatically calculated, they appear under one of two tabs in the Observed Standalone Selling Prices Requiring Attention section in the Overview page:

• Pending Establishment tab: Review the observed standalone selling prices displayed in this tab by clicking the Details icon and approve them by clicking Establish. If you require more information before approving the observed standalone selling price, change the review status to Pending Research.
• Pending Research tab: Review the observed standalone selling prices displayed under this tab to determine whether the sales are relevant or if some sales aren’t relevant. If you want to exclude some lines, you can highlight those lines and click Exclude. The application automatically recalculates the observed standalone selling prices.

Click Save to change the status from Pending Research to Pending Establishment.

This table shows you the status and actions you can take after reviewing observed standalone selling prices:

Status and Actions

Tab	Observed Price Status	Actions to Take
Pending Establishment	Suggested Valid	Mark as Invalid Establish Price Don't Establish Price Require Investigation
Pending Establishment	Suggested Invalid	Mark as Valid Establish Price Don't Establish Price Require Investigation
Pending Establishment	Marked Valid	Establish Price Mark as Invalid Don't Establish Price Require Investigation
Pending Establishment	Marked Invalid	Establish Price Mark as Valid Don't Establish Price Require Investigation
Pending Research		Mark as Invalid Establish Price Don't Establish Price