In the previous blogs, we have applied block prices to the product Lunchbox in Salesforce CPQ. Tango foods is offering COVID slab discounts with set prices for fixed quantities on the bundled Lunchbox product along with cost based prices for other products and here are the rules for their application.
Rule No 1: This is again a very special discount valid indefinitely due to Covid:
- Lunchbox’s list price is $15. If 20-30 lunchboxes are ordered then the price is 275, if 30-40 lunchboxes are ordered then the price is 400. An 10% additional discount is applicable for 41-50 units, 15% for 51-60 units. Because there is limited capacity to carry boxes by each transportation agent, Tango foods has decided to charge a per unit price of $18 above 40 units ordered by each customer. They also want to streamline the discounts and make it a slab discount structure based on the discount rates provided above.
Solution: This is simultaneous application of block pricing with an overage rate and a slab discount scenario. A slab discount schedule and pricing blocks are created. Discount schedule is applied to the product. The product pricing method is changed to Block.
Let’s see what the price is which Salesforce calculates if 45 units are ordered.
- $400 upto 40 boxes.
- For additional 5 boxes list price of $18 will be applicable along with a 10% discount so $18×5=90 with 10% discount is= $90-$9= $81
- The price here will be $400+$81 = $481
Let’s take another scenario and see what the price will be if 55 units are ordered:
- $400 upto 40 boxes.
- From 41 to 50 units the price $18 will be applicable along with a 10% discount so $18×10=180 with 10% discount is= $180-$18= $162
- For the next 5 units from 51 to 55 price 0f $18 will be charged and the discount will be 15% so $18×5 = $90 with 15% discount = $80- $12= $68
- The price here will be $400+$162+$68 = $630
Rule No 2: For a specific customer
- Lunchbox’s list price is $15. For customer Mango if 30-40 quantity is ordered then 10% discount is offered and if 41-50 are ordered then 20% discount is offered on Lunchbox. This price has to be given all the time to Mango. Another Customer Orange has a special relationship with Tango food and is always given a special price. This was set up automatically for Orange when the first quote was created.
Solution: This is a contract pricing scenario. The contract pricing is set on the quoteline in the quoteline editor.
Note: Contract can be manually set from Orange and Mano’s account settings. If this conditional and not permanent a price rule is more appropriate, then setting up the contracted price
Rule No 3: Salesreps and self-order customers of Tango foods want to assign different quantities for different months of their subscription. For example, they want to assign 20 lunchboxes for 1st month, 30 for 2nd and 40 for third month for a 3-month subscription? Can this be done in one quote? Can this be done at all and under what conditions and when?
Solution: The scenario that is described in rule no 3 is a MDQ (Multidimensional quote scenario). A subscription product can also be a MDQ product but a bundled subscription product cannot be a MDQ product. In our case Lunchbox is a bundled subscription product hence this is not possible. If let’s ay one of the Saladboxes is available on subscription, then this scenario is valid for that salad box. In such a case Salad box has to be set up also as a Multidimensional quote product through price dimension related list on the product record.
Rule No 4: Tango foods is not getting the return on investment for some of the food boxes which it is selling in addition to Lunchbox. Tango foods has decided that salads and soups when bought individually have to be marked 60% above the cost. The list price of 12 oz salad is $10 and 12 oz soup is $8 per box. The cost of salad 12 oz is $8 per unit and the cost of 8oz soup is $6 per unit. Sales managers at Tango foods also want that reps should not be able to markup less then 60% of the cost. The maximum that they can mark up is 90% of the cost. So, the price of salad has to be cost+60% —- cost +90%. The cost should not be editable in the quote.
Solution: This is a cost-plus markup pricing scenario. As this is a policy change by Tango Foods, applicable salads and soups will have to undergo a pricing method change. The pricing method on these products has to be changed to cost. Per unit costs has to be maintained in the ‘Cost’ related list. There is a field in the pricing section of the product record “Cost editable”- This should be left unchecked. There is a mark up field in the quoteline where the sales rep adds the mark. A validation has to be added in the quote line object which will ensure that the mark up field is 60% to 90% of the unit cost.
Let’s see what the price will be with 60% and 90% markup for Salads and Soups:
- Salads For qty 1 with 60% Mark upà Cost = $8, 60% of$ 8 = $4.8, so per unit price will be $12.8. Note that the list price is $10 and will not be valid in this case
- Salads For qty 1 with 90% Mark upà Cost = $8, 90% of$ 8 = $7.8, so per unit price will be $15.8. Salesreps have a band of $12.8 to $15.8 in this case. Same as above, list price is $10 and will not be valid in this case
Rule No 5: Rule 4 + Production managers have faced a resource crunch during COVID and have to include a overhead cost of additional 10% at Tango foods also want that reps should not be able to markup less then 70% of the cost. The maximum that they can mark up is 100% of the cost. So, the price of salad has to be cost+70% —- cost +100%. The cost should not be editable in the quote.
Solution: Same as rule no 4 with the applicability of an additional overhead cost of 10% to the per unit cost and only conditionally applicable during COVID (for the months of June- Aug). Since this involves an additional conditional cost, we can use price rule and price action to edit the per unit cost. The other option is a manual option of letting the sales reps edit the cost by checking the cost editable field on the product record but this not the best option.
Let’s see what the price will be with 70% and 100% markup for Salads and Soups along with additional 10% overhead cost:
- Salads For qty 1 with 70% Mark up: Cost = $8, 10% Markup on $8 is $0.80 so the total per unit cost becomes $8.80. 70% of$ 8.80 = $6.16, so per unit price will be $8.80+$6.16= $14.96. Note that the list price is $10 and will not be valid in this case. We can apply rounding rules here.
Salads For qty 1 with 100% Mark up: Cost = $8, 10% Markup on $8 is $0.80 so the total per unit cost becomes $8.80. 100% of$ 8.80 = $8.80, so per unit price will be $8.80+$8.80= $17.60. Note that the list price is $10 and will not be valid in this case. We can apply rounding rules here. List price can remain the same in both scenarios and will not be affected as the pricing method is cost.