A very simple, cost-based method for calculating sell price is the cost-plus option found in the customer file. Instead of selecting a price bracket for the Default Pricing Type field, as in the example we looked at above, you can select Cost Plus and then enter a percentage markup in the Cost Plus % field just below (Figure 4). As you have seen, the price brackets mechanism allows you to create prices based on a percentage markup over the cost of the inventory item. The cost-plus option allows you to do the same thing, but the markup is defined in the customer file and therefore has a different scope. Using the Cost-Plus option in the customer file instead of one of the price brackets allows you to set a single percentage markup above inventory cost for all items purchased by that customer. It is a very simple and, therefore, relatively inflexible means of calculating a price on anything that customer buys. No matter what the inventory item, the customer will be charged the same percentage markup on that item as it is charged on every item.

As you can see in Figures 5, the cost-plus option contrasts with the price brackets option in that the percentage markup is global for all items a given customer purchases, as opposed to being global for all customers in a given price bracket who purchase a given inventory item.

SUMMARY OF PRICING USING THE COST-PLUS OPTION

When the Cost-Plus option is used, a customer file is configured such that all items purchased by that customer are priced based on a single percentage markup over the cost of each item.

How it is implemented: The Default Pricing Type field on the Pricing tab on the Customer File Maintenance form (Section II J) is set to Cost Plus instead of one of the five price brackets. A percentage markup is then entered in the Cost Plus % field on the same tab. This percentage is applied to the inventory item Sales Cost displayed on the Cost Information tab on the Inventory File Maintenance form (Section II G).

Advantages: Allows prices to fluctuate with the cost of inventory items. Allows all pricing to be customer specific, without any need for the customer to be part of a group defined by a price bracket. Allows you to change the percentage markup for all items that customer buys by changing one field, and thus allows for instant visual checking of the price structure assigned to that customer by checking the one field.

Disadvantages: Does not allow the flexibility of having different percentage markups for different inventory items purchased, nor does it allow for dollar markup over cost or a fixed dollar price on any items that customer purchases.

Pricing Using Price Brackets

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Pricing Using Global Ad Pricing