The various pricing mechanisms listed above are intended to be used together to balance automation with flexibility as best as is possible. A common approach is to set up price brackets to be used by the majority of customers, and then use the negotiated pricing mechanism for certain customers that require customized pricing structures. Some clients configure almost all of their pricing through negotiated files, which allows for a lot of flexibility but requires more maintenance than using the brackets. Almost all of the pricing options, other than creating an individual negotiated pricing file for each customer, requires that you organize your customer base into groups. Therefore, an important first step would be to look at your customers and determine what groups your customers naturally and logically fall into. Can all of you customers be generally categorized, in terms of pricing structures, into five or fewer groups? If so, price brackets might be all you need (with a negotiated file or two to handle exceptions). If your customers cannot be logically classified into so few groups, you might want to define your largest groups in terms of price brackets and use the negotiated group pricing mechanism to create additional groups for those customers that fall outside of the five largest groups. Or you might find that your customers fall into five or fewer groups in terms of pricing for most products, but for certain products the five brackets are just too rigid. In that case you can use the negotiated pricing files to deal with inventory items that do not fit into the normal pattern. Of course, when analyzing your customer base for these purposes, it is always important to keep in mind your expectations for future growth in your business. New customers and new product lines will need to be incorporated somehow into whatever pricing regime you put in place.

As you saw in the discussions above, the pricing mechanisms are configured using various forms: the Inventory File Maintenance form, the Customer File Maintenance form, the Negotiated Pricing form, etc. There is another form, called the Update Inventory Pricing form (Figures 10), which allows you to view most of the pricing options in one place and make changes to some of the options as well. This form gives you a snapshot of the various mechanisms currently in place for pricing a given inventory item. Note that it is not a complete snapshot, however, as it does not give customer-specific information regarding which customers are assigned to which brackets, it does not tell you which customers might be using the cost-plus option, and it does not indicate whether the item is currently affected by a global ad price.

There are also various reports and inquiries, which will be discussed later, which provide information on the pricing mechanisms in place.

Once you feel you have a good sense of how you want to construct your pricing regime, you can begin to set up the various master files. Putting these files in place is the topic of the next section, Setting Everything Up.

Pricing Using Markets

TOC

Section II: Setting Everything Up