How Profiles, Segments, and Strategies Work Together

You set up a customer pricing profile, pricing segment, pricing strategy assignment, and pricing strategy to price an item in a sales order.

These objects, and the price list, cost list, and discount list, are each an example of a pricing entity. A pricing entity is an object that stores details that Oracle Pricing uses to price an item.

In this example, Pricing prices a sales order it receives from Oracle Order Management for customer Computer Services, who places orders through the direct channel.

Here's how it works.

1. Receive a sales order from an Oracle Application, such as Oracle Order Management.

2. Use a pricing algorithm that prices the sales order at runtime. The algorithm uses these objects.

   • Service mapping

   • Pricing profile

   • Pricing segment

   • Pricing strategy assignment

   • Pricing strategy

   For example, the pricing algorithm calculates the list price, applies discounts, and applies taxes. For details, see How Service Mappings, Pricing Algorithms, and Matrixes Work Together.

3. Use the pricing profiles you set up to create a relationship between the pricing attributes that describe buying behavior, and each customer.

   In this example, Pricing receives a sales order for Computer Services, who is a large, highly valued, and highly rated customer who exhibits high revenue potential and medium cost to serve. For details, see Manage Pricing Profiles.

4. Pricing compares each attribute of the pricing profile to each pricing segment until it finds a match. It uses the pricing segments you create to group customers who exhibit a similar set of characteristics and buying behaviors.

   For example, you can group large, highly rated customers who exhibit a medium cost to serve into a single segment, such as Tier 1. The characteristics of the segment and customer match each other.

   	Cost to Serve	Rating	Size
   Customer: Computer Services	Medium	High	Large
   Segment: Tier 1	Medium	High	Large

   So, Pricing uses the Tier 1 pricing segment for Computer Services.

5. Use the pricing strategy assignment to assign a pricing strategy to the customer. You can use different strategies for the same pricing segment to support more than one selling scenario, or you can use different strategies for different segments. For example:

   • If the Pricing Segment is Tier 1, and if the Transaction is Sales Order, and if the Channel is Direct, then use the Commercial pricing strategy.

   • If the Pricing Segment is Tier 2, then use the Corporate pricing strategy.

6. Use the pricing strategy to make sure pricing meets your pricing objective. The pricing strategy references rules you create on each list. Pricing uses the lists to calculate price.

   Type of List	Description
   Price	Get the list price for the item.
   Discount	Get adjustments on the price.
   Cost	Apply cost plus pricing, when required.
   Currency Conversion	Determine currency and conversion rate to use, when required.
   Shipping Charge	Get the shipping charges.

   The user sets the customer in the sales order. Order Management sends a request to Pricing to get the segment and strategy, then displays details in the View Pricing Strategy and Segment dialog.

   

7. The user adds an item to the sales order, Pricing calculates the sales order total, then sends the priced sales order, including each pricing charge and charge component, to Order Management.