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Salesforce CPQ has many prices and discounts and they are applied or used based on the pricing strategy of the company. Many kinds of prices are working in tandem for different product at a given point in time. Despite many prices working in tandem, we can still figure out the common trends in a company pricing strategy. Will have more blogs on the pricing strategy later.

The different Prices and Discounts which Salesforce CPQ has are as follows:

List Price, Percent of Total, Block Price, Cost Plus Markup Pricing, Contracted Pricing, Regular Price, Customer Price, Partner Price, Distributor Price, Net price, Prorated List Price,  Special Price, System Discounts, Discount schedules, Additional Discounts, Partner discounts, 

In this blog, we will see how to set up foundational prices like, List Price, Block Price, Percent of Total, and Cost Plus Mark Up Pricing.

List Price- List price is the price which is maintained in the Price book. Price book is a Salesforce standard object where prices are maintained. Pricebook has another object child object called as Pricebook Entry. Pricebook entry contains the List Price of the Product. Pricebook entry links the Product, Pricebook and List Price. There can be multiple pricebooks with pricebook entries which can have different prices for the same products. These Pricebooks can be applied in different contexts in pricing. List Price is the price that is maintained in the applied pricebook at the time of Pricing. All other Prices are calculated from List Price if the Pricing Method is List Price.

Steps to Maintain List Price

Step1 – Pricing Method should be maintained as List Price if the List is to be used. List Price can also be maintained without the Pricing Method but then it becomes passive. Pricing Method is a field on Product object and is Mandatory to maintain for any pricing to be used. List Price is one of the Price Methods in Pricing Method field. So the first step that this should be maintained.

Step 2 – Pricebook Entry to be maintained in the Standard Price book and other custom Pricebooks. It is mandatory to maintain prices of the Products in the Standard Pricebooks. There is a Pricebook object has a look up on the Product and it is available in the related list of Products. Pricebook entries are available in the related list of Pricebook as it has a look up on Pricebook. Product price should be maintained in the Pricebook Entry and the Pricebook Entry should be made active if it is to be used.

Block Price – Block Price is also one of the Pricing Methods to price products. When Block Price is chosen then this price replaces the List Price. Block price is a price used to sell a block of products at a fixed price. Unlike list price, Block Price is not a per unit price. It is price for the block. For example, Tango Foods decides to sell 10-15 lunch boxes at a price of $100 and 16-20 at a price of $150. So, 10-15 and 16-20 are blocks and the price is per block and not per unit. This pricing strategy is often used with Software licenses where a range of user licenses is sold for a price.

Steps to Maintain Block Price

Step1 – Value of the Pricing Method field for a Product should be maintained as Block Price if the Block Price is to be used.  

Step 2There is a Block Price related list on the Product. Price for the blocks of quantities need to be maintained in this related list for a Product.

Following considerations should be kept in mind to maintain the Blocks

  • To maintain the price for a quantity block of 10-14 and 15-20 units of a product, the lower range needs to be 10 and the upper range needs to be 15 and for the next block the lower range needs to be 15 and upper range needs to be 21.
  • If the upper range is blank then Salesforce CPQ considers the upper range to be infinite hence it is important to make sure that the black range is carefully set.

 How the List Price is used with Block Price

The scenario is that the price of a Lunchbox is $15 with Tango Foods. As a promotion for some offices Tango Foods is offering 17-24 Boxes at $150 and 25 -30 Boxes at $200 but then from the 31st box Tango Foods wants to charge the List Price of $15 Per box.

Steps to the achieve the above scenario

  • This is an Overage scenario. This can be achieved by the overage rate custom field on the block price object.
  • The overage for quantity > 30 will become $15
  • In the above example Block 1 will be Lower Range 17 and Higher Range 25 with a price of $150.
  • Block 2 will have a lower range of 25 and Upper Range of 31 with a Price of $200
  • Block 3 will have a lower Range of 31 and Upper Range left “Blank” with a price of $215 with overage rate of $15.

Cost Plus Mark Up Prices –  Cost Plus Mark Up pricing is one of the primary pricing methods in Salesforce CPQ. Cost Plus method is a very popular method where is based on costs. Costs are generally defined as the fixed (overhead) costs and the variable costs. Variable costs are the running to produce the goods and the overhead cost is a fixed component of cost which is incurred irrespective of the production.

Most companies will also include marketing and sales expenditure in the costs There are various ways by the which costs can be derived. Once the costs are derived a mark up percentage is set which is on the cost. Cost Plus Mark then becomes the price of the product. For example, Tango Foods decide that the total cost a Lunch Box is $10 and then there will be a Mark of no more then 40%. Then price of a Lunch Box will be $10+ 40% of 10 = $14.

Cost Plus pricing is basically used where the Price elasticity is extremely high. Travel and Food industries. I will write a separate on Price Elasticity and how it determines the pricing strategy of a company and an industry.

Steps to Maintain Block Price

Step1- Value of the Pricing Method field for a Product should be maintained as Cost if the Cost Plus Price is to be used.  

Step 2There is a Cost related list on the Product. Unit cost has to be maintained in this Cost object and needs to be activated

Step 3 There is a Mark Up % field on the Quote object which needs to be maintained. The Coast per unit will be marked up by this percentage. This Mark up field can be overridden at the quote line item level.

Step 4 – The Cost Plus Mark unit price will reflect in the Special Price field in the quoteline. This field is created only to store the value of this price and for it to be compared with the List Price. The pricewater will continue to be calculated further on this price.

Percentage of Total –  Percentage of Total Price is one of the Primary pricing techniques in Salesforce CPQ. Percentage of Total Price works on getting the product’s price to be based on the Price of the quote. In other words, the price of the product is based on the price of the total of the products on the quote.

For example, a machinery maintenance is sold at 10% the price of the quote irrespective of what it’s list price is. So, if 10 ultrasound machines are sold for $10,000 each then the total price on the quote will be$100,000. Maintenance package for this could be sold for 10% of the quote price which means the price for this product in our example would be $10,000. Let’s take another example of Tango Foods trying to sell shipping as a percent of total of the number of Lunchboxes purchased. So, at a List Price of $15, if 15 lunch boxes are purchased then it is $225. With shipping being 2% of the total, will be $4.50.

Percentage of Total price can be based on List Price, Regular, Customer or Net Price.

Here are the popular scenarios where the Percentage of Total Price is maintained:

  • Percentage of Total on a Stand-Alone Product in a quote
  • Percentage of Total on a Subscription Product in a quote
  • Percentage of Total Price on a Product in a Bundle

Steps to Maintain Percentage Of Total Price for a Stand Alone Product in a quote

Step1 – Value of the Pricing Method field for the Product should be maintained as Percent of Total

Step 2 An option must be chosen from ‘Percent of Total Base’ field to determine whether the Percent of Total Price is from List, Regular, Customer or Net Price

Step 3  ‘Percentage of Total (%)’ field must be populated with the number specifying the actual percentage which will be used to calculate the price.

Steps to Maintain Percentage Of Total Price for a Subscription Product in a quote

Step1 – Value of the ‘Pricing Method’ field for the Product should be maintained as List

Step 2 ‘Subscription Pricing’ field should be populated with the value of ‘Percent of Total’

Rest of the Steps are the same as Steps no 2 and 3 in the Stand Alone product scenario mentioned above.

Steps to Maintain Percentage Of Total Price for a Product in a Bundle

Step1 – Value of the ‘Pricing Method’ field for the Product should be maintained as Percent of Total.

Step 2 ‘Percent of Total scope’ field should be populated in the product option record for this product for a specific bundle and this option price should not be bundled with the parent product.

Rest of the Steps are the same as Steps no 2 and 3 in the Stand Alone product scenario mentioned above.

I hope that I have able to give a fairly decent idea on the maintenance of these prices in Salesforce CPQ. In the next blog I will write about the maintenance of special and contracted prices.

Your likes, comments and shares will motivate me to keep writing.