Assigning Rank in Product Velocity Pricing

Use Product Velocity Pricing to build matrix cells based on product ranking. With velocity pricing, sales prices update to reflect changes in a product's rank. For example, slower moving products have a higher carrying cost, so set up velocity pricing to charge more for low-ranking products. When customers regularly buy one of your slow-moving products, the product's rank increases. Velocity pricing then decreases the product's price as the product's rank increases.

Product velocity pricing can achieve the following:

• Ensures that up-to-date product performance information is used to set pricing policy.

• Fine tune pricing for products of different ranks.

• Minimize the number of matrix cells needed for pricing.

Product Velocity Pricing and product ranking work together to change the price as product rank changes over time, as follows:

• Product additional velocity pricing - The system adds a formula to each progressive sell matrix cell that increases the price as the products rank falls.

• Product alternate velocity pricing - The system changes the formula on the original sell matrix, including formulas for quantity breaks, based on the product rank. For each customer/product matrix cell, you can set up alternate velocity pricing for either a customer or product, but not both. Alternate velocity pricing overrides additional velocity pricing.

Product rank in velocity pricing is affected by the following control maintenance records:

• Default Rank for Velocity Pricing - Defines which rank the system should use if the product does not have a rank for the pricing branch of an order.

• Use Central Warehouse Branch Rank If No Pricing Branch Rank - Determines if the system should use the item rank of the Central Warehouse branch (parent branch) rather than the child branch. The default is Yes.

This topic contains the following procedures:

• Displaying the appropriate velocity pricing screen

• Applying product additional velocity pricing

• Applying product alternate velocity pricing

To display the velocity pricing dialog box:

1. From the Maintenance > Price Maintenance menu, select Sell Matrix to display the Sell Matrix Maintenance window.

2. Enter the necessary information to display the sell matrix you want to use.

3. Select Edit >Velocity Pricing to display the Velocity Pricing selection dialog box

4. Select one of the following:

5. Product Additional - Displays the Product Velocity Pricing dialog box. Continue with the additional velocity pricing procedure.

6. Product Alternate - Displays the Product Velocity Pricing - Alternate dialog box. Continue with the alternate velocity pricing procedure.

To apply product additional velocity pricing:

1. In the Rank Number field on the Product Velocity Pricing dialog box, enter a product ranking method number.

Note: Products are ranked A through G. Ranking methods use numbers 1 through 5. You can view the ranks assigned to each product for the different ranking methods on the Product Maintenance Ranking window (Maintenance > Product > Pricing > Product Price Maintenance > Pricing > Ranks).

2. In the Additional Formula column, enter the formula that applies to the matrix for each rank to lower or raise the price according to the profitability of the product.

For example, you might adjust the following ranked product's pricing as follows:

If both customer and product velocity formulas are assigned to a matrix cell, the system combines the additional formula from each dialog box and calculates a selling price.

Note: A constant dollar value ($) in the Basis field on the Sell Matrix Maintenance window overrides product velocity pricing.

3. Save your changes and exit the dialog box.

To apply product alternate velocity pricing:

1. In the Rank Number field on the Product Velocity Pricing - Alternate dialog box, enter the number of a customer ranking method.

Note: Ranking methods are numbered 1 through 5. Products are ranked A through G.

Select File >Ranking to view current product ranks.

2. In the Basis column for each rank (A through G), enter the basis for determining the selling price.

3. In the Formula column for each rank (A through G), enter the formula to use with the basis for determining the selling price.

For example, you might replace the pricing for a rank 1 product as follows:

4. Save your changes and exit the dialog box.

The alternate velocity pricing entries replace the original matrix cell's pricing set up when the customer places an order for the ranked product.

See Also:

Ranking Customer Products

Pricing Basis Fundamentals

Assigning Rank in Customer Velocity Pricing

Creating Individual Matrix Cells