Administering Pricing (2024)

Plan

Plan How You Will SegmentCustomers

• Segment your customers so you canoptimize the price you charge for an item according to the buyingcharacteristics of your customers.

• Define pricing segments so youcan sell the same item to different customers in different marketsaccording to their willingness to pay.

• Specify who and under what circ*mstancesto vary price to achieve the best returns.

Assume you developed the Heart Wrist Watch, a newproduct that monitors heart rhythms and can communicate the resultsimmediately to a person of the wearer's choice, such as a coach orphysician. You're marketing the device to long-distance runners.

Your market research determines you should priceaccording to geographic region.

Note

• Use high margin pricing in NorthAmerica and Europe where your early adopters are willing to pay apremium for the wrist watch.

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

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

Plan Your Profiles, Segments,Assignments, and Strategies

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

Note

Assume you sell the wrist watch through a directchannel 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 workingrelationship with Softgear, so set Value to High.

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

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

   • Rating is the perceived value ofa 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 internationalcompany, so set Size to Large, and they're located in South Korea,so set Region to East Asia.

     See Also

     How to Make a Price List in Excel (Step by Step Guidelines) - ExcelDemyTransforming a Complex Pricing List into a Quoting Tool in Excel – Part 2Free Price List Templates | SmartsheetCreating an Interactive Pricing Application using Excel’s New Dynamic Array Functions

2. Create a pricing segment that representsyour East Asian market.

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

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

   • South Korea is in East Asia, soset Region to East Asia.

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

4. Use the predefined Corporate PricingStrategy, which already specifies most of the pricing details thatyour East Asia segment requires. Modify it, as necessary.

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

Manage

Use the Pricing Administration work area to manageall your rules.

This example applies a one-time, 10% discount onthe sale price of the wrist watch during a holiday season that startson 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, configureditem, coverage, service, or subscription.

• Use a one-time charge or a recurringcharge.

• Mark up or mark down, by dollaramount or percent.

• Apply separate charges for a singletransaction, such as a $300 sales price charge for a cell phone, andanother charge for the subscription fee for the cell phone.

• Search across all your rules.

Manage Price Points on YourPrice Waterfall

A price waterfall illustrates adjustments and discountsyou 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 SalePrice charge for an item on a sales order.

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

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

  Base ListPrice, Net Price Plus Tax, and Margin are each an example of a priceelement.

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

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

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

    See Also

    How to Make a Price List in Excel (Step by Step Guidelines) - ExcelDemy

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

• Use a price element as the pricingbasis to calculate a price adjustment.

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

For details about tier adjustments, see Tier Pricing.

Run

Centralize Your Pricing

Create and enforce pricing rules and policies acrossyour entire enterprise.

Note

• Deliver consistent and accurateprices across sales channels, such as web stores, direct sales, partnerstores, retail points of sale, and more.

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

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

Administer Runtime Pricingfor 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 foreach order line. For example, sales price plus installation fee.

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

• Integrate with Oracle Financials for determine tax charges.

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

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

  • Base List Price Applied from PriceList 1

  • List Price

  • Your Price

  • Exclusive Tax (Vat20 20%)

  • Net Price Plus Tax

Administer Runtime Pricingfor Oracle Inventory Management

Administer runtime pricing for transfer orders.

Note

• Use your set up from the Setupand Maintenance work area of the Manufacturing and Supply Chain MaterialsManagement offering to manage financial orchestration data for materialtransactions that happen in your global supply network.

• Use your set up from the InventoryManagement work area to receive the event, identify the financialflow 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 accordingto a predefined matrix class specifically for financial orchestration.

• Modify the predefined pricing algorithmthat Pricing uses for financial orchestration.

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

• Create pricing rules for nonconfigureditems or configured items.

Enforce

Enforce Controls on ManualPrice Adjustments

Enforce controls on the manual price adjustmentsthat your users can make in the Edit Sale Price dialog of an orderline.

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

• Administer the price list to enforcecontrols on each manual price adjustment.

• Apply one or more adjustments onthe net price.

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

• Apply adjustment as a percent oramount.

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

• Apply adjustments to each rolled up charge.

Use Guidelines to EnforcePricing Policies

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

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

The price adjustment in row2 contains the following warnings. The charge has a pricing violationfor the price component Custom Adjustment. The price component CustomAdjustment must be less than or equal to 100 USD.

A pricing guideline is a rule you create that controlschanges 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, discountdiscipline, or compliance.

• Make sure sales orders conformto the price and discount strategies that your corporate pricing policiesrequire.

• Prevent excessive discounts ormarkups.

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

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