1. Administering Pricing
  2. Pricing for Covered Items

Pricing for Covered Items

Set up pricing rules that affect coverage on a price list. Manage the rules between each coverage item and each covered item.

A coverage item is an item that adds value by providing coverage for a covered item. For example, a six month warranty is a coverage item for a laptop computer, and the laptop computer is the covered item.

  • Create a pricing rule for a coverage item that covers all items on a price list.

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

  • Use an amount or a percent of the covered item price in each rule.

  • Create one or more charges for each rule between the coverage item and the covered item. Set each charge as a one-time charge or a recurring charge.

  • Calculate each coverage pricing rule according to an amount or to a percent of the covered item price for a duration. For example, the price for the Gold Warranty coverage for a laptop for three years is $10 for each year, with a total amount of $30 over the full three year period.

  • Import and export coverage pricing rules from price lists.

Note

  • Pricing supports coverage pricing through an integration with Oracle Service Contracts. For details about how to set up service contracts, see Implementing Enterprise Contracts.

  • If you set the Service Duration Type attribute to Variable on a subscription, then you can apply a discount on the subscription. For details, see Set Up Coverages for Sales Orders.

  • You can't apply a discount on a coverage.

Differentiate Pricing for Coverage

You can sell an item and also sell coverage for an item. In some situations, you might need Pricing to price a coverage item for a warranty or support differently than it prices a coverage item for a durable good. The coverage item price might depend on the item that it covers. For example, assume a company that builds medical devices sells items to medical clinics.

Covered Item

Coverage Item

MRI machine

Technical support for an MRI machine

CT scanner

Technical support for a CT scanner

A technician typically applies a more sophisticated skill set when supporting an MRI machine than when supporting a CT scanner. Pricing allows the medical device company to differentiate the price of the support that it offers for the MRI machine from the support that it offers for the CT scanner.

Calculate One Time and Recurring Charges for Covered Items

Here's the calculations that Pricing uses to calculate the charge for each covered item.

Calculate One-time Charge

Calculate Recurring Charge

To calculate the extended amount, multiply the one-time charge by the quantity of units of the covered item. For example, if the one-time charge is 25, and if the quantity is 4, then the one-time charge is 100.

Note that a one-time charge applies to the entire duration of the coverage.

Calculate the recurring charge for each covered quantity for each primary UOM (unit of measure), when the UOM is Time.

  1. If the duration UOM isn't equal to the price periodicity UOM, then set the duration UOM to the price periodicity UOM.

    For example, if the duration UOM of the coverage is 1 Year, and if the price periodicity UOM is 6 Months, then set the duration UOM to 6 Months.

  2. Multiply the recurring charge by the quantity of units of the covered item.

  3. Multiply the result of step 2 by the duration.

For example, if the unit price for the monthly charge is $10, and if the quantity of units is 1, and if 12 months have passed, then the result is.

  • Extended amount of $10 ($10 multiplied by 1, where 1 is the quantity of units of covered items)

  • Total coverage amount of $120 ($10 extended amount multiplied by 1 unit multiplied by 12 months)

Related Topics