Overview
One of the biggest time savers in all of TRX Enterprise is price rules. Price rules coupled with the Auto Quotes interface can cut hours out of the workweek for an average company. It used to be that you would get a price sheet from a manufactures, have to look up the item, change the cost and figure your new price. This had to be done hundreds of times for a manufacturer. That does not take into account your special price sheets for high volume and contract customers that had to be created, and item labels that had to be printed for the showroom floor. The amount of manpower needed to constantly keep your inventory current still was not the biggest issue. Because every minute your inventory was not updated, your profit margin was walking out the door.
This scenario goes the way of the dinosaur with TRX Enterprise. Now with a click of a button you can take a digital file from the Auto Quotes manufacturer updates, and within minutes, update a whole manufacture. With proper price rule setup and management those updates will instantly hit the showroom floor, sales force and project teams updating all pricing for volume customers and walk-ins alike; protecting your company's margin from walking out the door. You can even print new item labels based off the manufacturers price update. All this before you finish the morning coffee.
Detail
In this section we will cover the theory and mechanics behind setting up price rules in TRX Enterprise.
Section one: Price rule initial setup
Section two: Price Rule Theory
Section three: Setting up Price Rules
Section One: Price rule initial setup
Before you can start creating price rules you need to put some thought into your initial setup. There are two very important decisions you have to make that will tell TRX enterprise how to handle conflicts that will arise. By recognizing these decisions as hard fast rules you develop logic for your price rules that will be easy to understand and maintain.
Resolving conflicts lowest price vs. highest price -The concept is simple you, have two or more price rules for an item, one could be for the manufacturer and the other could be customer type and Item. Which one should TRX use? In this setup function you set a system wide rule declaring that either the highest or lowest price should be used.
Note: We only recommend using the lowest price to resolve conflicts when using the AQ Interface. This tutorial will be written with only low price logic explained so as not to create confusion. If you must choose the highest price to resolve conflicts, you do so at your own risk!
Enforce contract pricing over price rules – A contract price is considered a "Customer / Item" or a "Customer Type/Item" rule. These rules were created with special priority capability for times when an actual pre-arranged price contract with a client exists and it is NOT the lowest price rule. Checking yes allows the TRX user to maintain margins in this situation. By checking this box any customer / item rule will trump all other rules to preserve contract pricing integrity.
Section 2: Price Rule Theory
When you first start setting up TRX and you start looking at the task of creating price rules it can look a bit overwhelming. You have a lot of items and manufactures and you may need different rules for sales orders, POS and volume. Coming up with a strategy can seem very daunting. This section is meant to give you a framework or thought process to organize your plan of attack. This is not by any means the only way to create price rules, but it is a starting point if you do not have one.
When you update your manufacturers through auto quotes you are getting new costs basis and list prices. If you create rules that work off of either one of these your TRX selling price and volume breaks will automatically update across the system when you update price rules.
In order to set rules up we recommend resolving pricing conflicts to lowest price.
Also, we recommend contract pricing supersede other price rules. By doing this we create an ability to have certain clients set up with static pricing if we need it.
Then, base your price rules off of % mark down from list pricing. You gain better control over profit margins if mark down from list. When you mark up from cost (average, standard or last) you run the risk of penalizing the company for good purchasing and passing on that lower cost. With proper use of the Purchase assistant and PO generator you should see more inventory cost savings then before through lower on hand quantities while maintaining customer service levels.
Now that you have set up a frame, you should try to visualize your price rules and kind of a sifter. You can break the fifteen pricing types into three basic levels.
The first level is general rules that cover large amounts of items. You will want to use these rules to set a base line pricing for your inventory. There is manufacturer list pricing that you get through auto quotes and then there is your list pricing that you pass to your average customer, this level should set the latter. The key here is to use broad strokes, a few rules as possible to cover everything at this level. The best rules to use to set these are:
Manufacture – recommended for ease of management
Item Category
Customer Type
Customer Type / Item Category
2. Because you have made the choice resolve conflicting rules by lowest price you can set your list pricing and then "pull down" pricing to the second level for volume customers, volume vendors, items you need to move or stock a lot of. The second level is what you should spend time managing. These rules should be more liquid as you spot and adjust for inventory and sales trends. The best rules for this task should be:
Customer / Item category
Manufacturer/Class
Manufacturer/Category
Item Class
Customer / Item Class
Customer types / Items Class
Customer
3. The final and lowest level should be "specialty" rules. Unless you have a lot of contract pricing you should not have many of these rules. This is your lowest level of pricing so they should be few and very specific. Contract pricing would fall into this group if you have pricing set to override. Also item specific rules and flyer pricing would fall here, but you do not want many of these as they are laborious to manage. Rules types best suited for this level:
Item
Customer / Item - Contract Pricing
Customer Type / Item – Contract Pricing
4. There is a fourth type of rule but it does not fall into the leveling system these are the time-dated rules. They are created the same way as other rules but they have start and stop dates. They are used mainly for buying group sheets or special manufacturer deals. By setting your prices to mark down from list you can give special level three prices "sales" for when you do buy a boatload from China and the rules will automatically terminate at a predetermined time so you do not run the risk of missing rule change and loosing margin.
This was intended to be an example of how to set up a pricing rule structure and is by no means the only way. Every company has a different philosophy on pricing and we have designed our price rules to accommodate as many of them as we could. Instructions on how to create a price rule are in section 3.
Section 3: Setting up price rules
In this section we will explain how to create a price rule in TRX.
Go to ORD > Order Entry Special Functions > Pricing Schedule, you will see the above screen and your cursor will default into the start date.
Start Date – you will fill in a date if your price rule is to have a starting and ending date if there is not to be an ending date you do not need a starting date. This is used for specials, like buying group flyers. If this rule is meant to be perpetual you can leave it blank.
End Date – If the price rule will expire you can put the expiration date here.
Note: TRX Enterprise has a cancel expired price rules screen so you do not have search to delete expired price rules that will clutter up your system.
Next you will be taken to the Pricing type pull down menu; it is here that you will declare what type of price rule you are creating. You have thirteen types of rules to choose from.
Pricing Number | Pricing Type | Description |
1 | Customer | Very Specific Price rule for only one customer If conditions exists that a single customer has special pricing, this is your rule. Otherwise, stay away from Specific rules to handle broad categories of pricing. |
2 | Item | Very Generic Price rule and could be difficult to manage |
3 | Item_Category | Broad based price rule easier to manage. Be careful not to create a rule too low as we will always resolve to the lowest price |
4 | Customer / Item | Contract Pricing that is labor intensive to manage. Use with caution only when true contract pricing exists |
5 | Customer / Item_Category | Used for Customer specific price rules that differ by category of inventory Preferred over CUSTOMER |
6 | Customer_Type | Farther reaching than CUSTOMER alone but unlikely to fit complex pricing into one box. |
7 | Customer_Type / Item_Category | Preferred method due to the ability to handle many different customers in a customer type as well as many different categories of inventory |
8 | Customer_Type / Item | Use sparingly. |
9 | Customer_Type / Manufacturer | Another Preferred method due to the ability to handle many different customers in a customer type as well as manufacturer specific inventory |
10 | Item Class | Use sparingly |
11 | Customer / Item Class | Use sparingly |
12 | Customer Type / Item Class | Not bad but you must have a solid Class structure for your items. |
13 | Manufacturer | Newest price rule that is excellent for setting a base line for the highest prices we will charge for walk in customers. This rule makes sure you will not charge too much on the sales floor but can be easily overridden by customer_type for those doing more volume. |
After choosing your price rule type the screen has logic that will grey out any box that is not needed to create the rule. We do this so not to confuse the user and eliminate the possibility of a rule creation problem. All of your possible option boxes have F9 search capabilities for ease of use. The rule quantifiers include.
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Choose your rule quantifiers and then you are taken to the comments box it is here that you can make notes for yourself about this price rule. This comment will only available on this screen.
In steps 1 – 5 you defined who the price rule would affect. The remaining setup will determine how it affects the price. Once you finish entering the comments you will be taken to the Low quantity box.
Low Quantity – this will determine at what break the price rule will take effect. You can set your price to change at different sales levels. The first time through this will most likely be one, but you can change the discount at different levels. (Ex 1-10 gets a 10% discount 11- 1000 gets 20%)
Note: the system will set the high quantity for you. If you put a 1in low quantity, the high qty will be 999999, if you add a level at 10; the first row will become 1-9, the second row 10-999999. We do this to avoid holes and conflicts within price rules.
Price Rule – After you choose the level you get to choose the price rule.
Calc Factor – the calculation factor is probably the single most confusing part of price rules, instead of explaining I will give an example: All scenarios have the same variables:
Cost = $50.00
Price = $100.00
Calc factor = 10.00
Price Rule | Calculation | New Price |
% Markup from cost using multiplier | Cost + (cost *10%) | $55.00 |
% Markup from cost using Divisor | Cost/90% | $55.56 |
% Mark down from price | Price – (price*10%) | $90.00 |
$ Mark up from cost | Cost + $10.00 | $60.00 |
$ Mark down from price | Price - $10.00 | $90.00 |
Actual price | Calc factor | $10.00 |
This can be confusing so it is important to be sure of what you are setting up. You can check your resulting price in the results tab.
Price Override – This is equivalent to setting an actual price rule, if you want the price to be 19.95 put it in the price override box
Cost indicator – Your items have three possible costs indicators, and they are the same as your inventory warehouse. You also choose a cost indicator for your inventory in inventory set up. Choices are:
Calculated (AVG, Lifo, Fifo) inventory costing methods
Last cost – cost on the last PO
Standard cost – you can set standard cost in the warehouse.
Cost override – if you choose you can override those three choice and choose the cost
Note: We do not recommend the use of price or cost override in your price rules.
Finally, after choosing who you were going to affect and how you wanted to affect them you can see what you did to them. The results tab will show you each item the price rule affected and how the rule affected it. It is here you spot check the rule to make sure it is set up correctly. If it is a cost-based rule each warehouse could have a separate cost, you can spot check by warehouse.
Note: Spot-Checking prices by warehouse is only for reference. The rule is based on the warehouse cost (Calculated, STD or Last) of the warehouse that will ship the item.