Overview of Oracle Pricing

Use Oracle Pricing to plan, manage, apply, and enforce pricing so its consistent and profitable throughout your order-to-cash process.

Note

• Plan pricing strategies so they align with your business objectives. Use characteristics of your customer, the item, and the buying context to identify market segments.

• Manage the pricing rules that control how Pricing applies a price adjustment. For example, administer a discount on the list price of an item.

• Apply common pricing logic across all sales channels. Achieve consistent and accurate pricing throughout the order-to-cash process.

• Enforce spending limits to prevent an excessive discount. Make sure pricing is accurate so it meets your corporate revenue and margin objectives.

Plan

Plan How You Will Segment Customers

• Segment your customers so you can optimize the price you charge for an item according to the buying characteristics of your customers.

• Define pricing segments so you can sell the same item to different customers in different markets according to their willingness to pay.

• Specify who and under what circumstances to vary price to achieve the best returns.

Assume you developed the Heart Wrist Watch, a new product that monitors heart rhythms and can communicate the results immediately to a person of the wearer's choice, such as a coach or physician. You're marketing the device to long-distance runners.

Your market research determines you should price according to geographic region.

Note

• Use high margin pricing in North America and Europe where your early adopters are willing to pay a premium for the wrist watch.

• Use lower prices in emerging markets in South America, Africa, and India where you're currently entering the market and are using a loss leader strategy.

• Use discounted, competitive pricing in China, Korea, and Japan where you're already in a saturated market and are competing against established and new competitors.

Plan Your Profiles, Segments, Assignments, and Strategies

Determine price according to the characteristics of each customer, rather than using one-size-fits-all pricing.

Note

Object	Description
1. Pricing Profile	Create a profile for each of your customers that describes buying characteristics according to customer attributes. Revenue Potential Cost to Serve Value Rating Size
2. Pricing Segment	Group your customers into market segments that exhibit similar buying behavior according to market attributes. Revenue Potential Cost to Serve Value Rating Size You can also add your own attribute, such as Region.
3. Pricing Strategy Assignment	Assign your pricing strategy according to attributes. Pricing Segment. The pricing segment you assigned to the customer. Channel. Where you receive the sales order, such as direct sales or inside sales. Transaction Type. The type of transaction, such as sales order, service contract, or subscription.
4. Pricing Strategy	Create a pricing strategy that determines how to price your item to achieve your objectives. Set the Business Unit attribute of the pricing strategy to your customer's business unit. Pricing will use this strategy for each sales order that references the business unit. Create pricing rules that specify price, cost, discounts, and currency conversion. Create shipping rules that specify shipping charges. Create guidelines to control modifications that your users can make to price, net price, and margin.

Assume you sell the wrist watch through a direct channel to customer Softgear, located in Seoul, South Korea.

Here's your set up.

1. Create a pricing profile for Softgear.

   • You have a long-term, good working relationship with Softgear, so set Value to High.

   • Your research indicates that consumers in East Asia highly value the wrist watch and therefore have a high willingness to pay, so set Revenue Potential to High.

   • Consumers in this region are enthusiastic, early adopters of high-tech products and require little support, so set Cost to Serve to Low.

   • Rating is the perceived value of a customer to your business regarding their history, future outlook, relationship with your company, and so on, so set Rating to High.

   • Softgear is a large international company, so set Size to Large, and they're located in South Korea, so set Region to East Asia.

2. Create a pricing segment that represents your East Asian market.

   • The East Asian market for high-tech products is highly competitive. You must price the wrist watch at lower, competitive rates, so set Revenue to Medium.

   • Consumers are enthusiastic early adopters, so set Cost to Serve to Low.

   • South Korea is in East Asia, so set Region to East Asia.

3. Create a pricing strategy assignment that assigns the Corporate Pricing Strategy to direct sales orders that you receive from the East Asia segment.

4. Use the predefined Corporate Pricing Strategy, which already specifies most of the pricing details that your East Asia segment requires. Modify it, as necessary.

At run time, Pricing will use the Corporate Pricing Strategy to price the wrist watch when you receive a direct sales order for the wrist watch from Softgear.

Manage

Use the Pricing Administration work area to manage all your rules.

This example applies a one-time, 10% discount on the sale price of the wrist watch during a holiday season that starts on 12/19/18 at 8:16 PM.

Create rules that determine price for your items.

• Set up sales price, tiered price, discount, surcharge, freight, and adjustment according to attribute.

• Price a nonconfigured item, configured item, coverage, service, or subscription.

• Use a one-time charge or a recurring charge.

• Mark up or mark down, by dollar amount or percent.

• Apply separate charges for a single transaction, such as a $300 sales price charge for a cell phone, and another charge for the subscription fee for the cell phone.

• Search across all your rules.

Manage Price Points on Your Price Waterfall

A price waterfall illustrates adjustments and discounts you make on an item, typically from the base list price to your margin.

Here's the Sales Price Charge price waterfall.

Note

• This example illustrates the Sale Price charge for an item on a sales order.

• Include various types of charges that apply to your items and services. For example, installation charge, subscription, delivery fee, sale price, or restocking fee.

• A price element is an object that a pricing algorithm uses to capture different types of prices, costs, adjustments, taxes, or profit margins that it requires to create a price breakdown or pricing analytic.

  Base List Price, Net Price Plus Tax, and Margin are each an example of a price element.

• Use the price elements that come predefined with Pricing to define each price point in your waterfall, or create your own elements. For example:

  • Use the Base List Price element with a value of $1,000 to set the starting price point at $1,000.

  • Add the Price Adjustment element with a value of $200 to set the next price point, which is the List Price element at $800.

  • Continue adding whatever elements you need to the waterfall, such as discounts, tier adjustments, tax, margin, and so on.

• Use a price element as the pricing basis to calculate a price adjustment.

• Use and modify a predefined price definition, or create your own.

For details about tier adjustments, see Tier Pricing.

Run

Centralize Your Pricing

Create and enforce pricing rules and policies across your entire enterprise.

Note

• Deliver consistent and accurate prices across sales channels, such as web stores, direct sales, partner stores, retail points of sale, and more.

• Use a flexible application and services to integrate pricing across systems and applications.

• Use a variety of services, such as Price Sales Transaction, Calculate Order Totals, Validate Prices, and more.

Administer Runtime Pricing for Order Management

Administer runtime pricing for sales orders.

Note

• Calculate list price, net price, shipping, and tax according to your pricing strategy.

• Calculate one or more charges for each order line. For example, sales price plus installation fee.

• Price nonconfigured items, configured items, subscriptions, or services.

• Integrate with Oracle Financials for determine tax charges.

• Display the price breakdown and order totals in a dialog according to your requirements.

  For example, for the order line, specify how to calculate charges and specify which charges to display.

  • Base List Price Applied from Price List 1

  • List Price

  • Your Price

  • Exclusive Tax (Vat20 20%)

  • Net Price Plus Tax

Administer Runtime Pricing for Oracle Inventory Management

Administer runtime pricing for transfer orders.

Note

• Use your set up from the Setup and Maintenance work area of the Manufacturing and Supply Chain Materials Management offering to manage financial orchestration data for material transactions that happen in your global supply network.

• Use your set up from the Inventory Management work area to receive the event, identify the financial flow to use for the event, and calculate the transfer price.

• Calculate pricing for transfer orders while orchestrating financials, then store it as pricing data in Pricing.

• Create your pricing strategy according to a predefined matrix class specifically for financial orchestration.

• Modify the predefined pricing algorithm that Pricing uses for financial orchestration.

• Mark up or mark down price of the transfer order according to the price list, cost list, or source document price.

• Create pricing rules for nonconfigured items or configured items.

Enforce

Enforce Controls on Manual Price Adjustments

Enforce controls on the manual price adjustments that your users can make in the Edit Sale Price dialog of an order line.

A manual price adjustment is an adjustment that the user manually sets on an order line, such as adding a discount for a sales campaign.

• Administer the price list to enforce controls on each manual price adjustment.

• Apply one or more adjustments on the net price.

• Apply adjustment as a markup or markdown on each new price against a charge.

• Apply adjustment as a percent or amount.

• Control adjustments on order lines for buy lines or return lines.

• Apply adjustments to each rolled up charge.

Use Guidelines to Enforce Pricing Policies

Use a pricing guideline to control changes your users make that affect price.

In this example, the Order Entry Specialist set the Discount Percent to 5 on the List Price. The adjustment results in a 125 USD discount, which exceeds the maximum of 100 that the guideline specifies. Here's the warning that this example displays.

The price adjustment in row 2 contains these warnings. The charge has a pricing violation for the price component Custom Adjustment. The price component Custom Adjustment must be less than or equal to 100 USD.

A pricing guideline is a rule you create that controls changes your users can make to price, net price, margin, and so on. You apply it on an item, user role, customer detail, or time period. Pricing evaluates each guideline when it validates the sales order.

• Manage profitability, discount discipline, or compliance.

• Make sure sales orders conform to the price and discount strategies that your corporate pricing policies require.

• Prevent excessive discounts or markups.

• Prevent unexpected reductions of your profit margin. For example, write a rule that makes sure margin is 20% or more.

• Specify to display a warning or error when the modification exceeds the guideline.