Efficient Pricing Mastery: Dynamics 365 SCM Insights

If you missed my article about Pricing management module, please, have a look at it here

Efficient Pricing Mastery: Dynamics 365 SCM Insights | LinkedIn

November 21, 2023

Pricing management module became available in 10.0.33 version (generally available since April 2023) but still marked as ‘preview’ in Feature management form. This is the first article in a series dedicated to uncovering the fantastic breadth of possibilities in pricing management available to users of Microsoft Dynamics 365 through the new Pricing Management module.

This article is dedicated to a brief overview of the Pricing Management module and will give you a general idea of the capabilities of the new functionality, helping you decide whether it's necessary to delve into its details. I will elaborate on these details in subsequent articles dedicated to the Pricing Management module.

So, what capabilities does this module offer?

In brief, the use of the Pricing Management module allows configuring and managing the structure of the sales price, the components that make up the price, as well as variable factors and attributes that can influence the final sales price. Additionally, each component that contributes to the sales price can be allocated to various accounts, enabling the creation of transparent and clear analytical and financial reports.

Let's start with a brief overview of the components that can constitute the final price. All possible price components are presented in the image below:

Base price

There are four possible options to use as a base price during calculations.

• Activated standard item cost is the “Base price – inventory price” component. You can use this base price only if your inventory model is “Standard cost” otherwise the base price will be 0 as well as the calculated sales price.
• Item base price is the “Base price – purchase price”. It lets you set prices for each item by using either calculated values or manually entered values. Calculated prices use the following formula:?Item base price?=?Vendor list price?±?Vendor term agreements.
• Released product sales price this is the “Base price – sales price” component. In this case, price calculation mechanism uses the sales price for the Item from the released product record. It's calculated by using the following formula:?Unit price?=?Base price?±?Margin component price adjustments.
• Trade agreement price is the “Sales agreement price” component. The price that reflects a negotiated pricing strategy for a collection of customers and a group of specific products. You can configure the system so that it uses one of the following formulas to calculate the unit price based on the sales trade agreement price:Unit price?=?Sales trade agreement price?(if no margin component price adjustment applies)Unit price?=?Sales trade agreement price?±?Margin component price adjustments

Margin components

You can set up layers of margin components to adjust the base price up (positive) or down (negative). Margin component price adjustments have a calculation sequence and can be compounded to get the total adjustment price.

Discounts

There are six types of discounts that you can use in various configurations and pricing structures.

• Simple discounts - simple discounts reduce the product price by a percentage or amount.
• Quantity discounts - quantity discounts are given to customers when they purchase a specific quantity of a product.
• Threshold discounts - threshold discounts are given to customers when the total for a transaction reaches one or more specified amounts. Threshold discounts are applied after other discount types, because their eligibility is determined by the total order value.
• Mix-and-match discounts - mix-and-match discounts are given to customers when they purchase a specific combination of products.
• Free item – free item discount allows you to automatically add one or more products to the order, which the customer will receive for free along with the order.
• Coupon – coupon discount is required to qualify the valid coupon number (together with the sales order) for applying the discount in the calculation of the sale price.

Charges

Based on the customer that you're working with or the item that you're selling, you might want to apply specific additional charges.?Automatic charges, or auto charges, are automatically applied when you create a sales order. You can define auto charges for specific customers or items.

Rebates

These are Off-invoice discounts. You can have multiple price component code of this type. This component code calculated based in rebates configured in Rebate management module. A rebate is the return of part of the purchase price by a seller or a buyer.

As you can see, the functionality of the Pricing Management module provides extensive capabilities for shaping your specific price structure. But what should you do when different cases require the use of various price structures and price component values? To implement maximum flexibility in the mechanism of sales price formation, Microsoft suggests utilizing price attributes.

The possible options are presented in the image below:

Pricing management provides a set of prefilled price attributes from fields in related tables that are associated with products, customers, orders, and order lines. It also lets you create custom price attributes and associate them with orders, customers, and items. You can use those price attributes when you create pricing rules and conditions. Then, when an order is placed, the pricing engine will then use the associations to determine the appropriate price.

But that’s not all yet! Based on one of the order header price attributes you can configurate different price structures (Price trees).

I hope that this brief overview has been useful to you. If you are interested in the possibilities offered by the Pricing Management module, if you want to learn how to configure a flexible price structure and see possible examples of use, then follow me and stay in touch for news. Very soon, I will publish the second article in the Efficient Pricing Mastery series.