Distributors may choose to provide costs loaded with overhead factors –typically 3-7% on some or all products that they sell. Inform accommodates these "loads" by allowing you to create formulas under the Price Rollup Schedule.
If you want to use loaded costs, then 1) Configure how Cost and Price values are managed in the Company Master. 2) You can then create the formulas under the Price Rollup Schedule. 3) Finally, you can update pricing for existing products.
- Configure defaults in the Company Master
The structure of price formulas is highly configurable and not fixed to the required fields. You can edit user-defined Price and Cost fields Company Master on the Pricing/Costing tab.
You can also use the Pricing/Costing tab to define your C6 and C7 cost fields.
Designate one field to equal the Loaded Cost (usually the C6 field). You can then use the other field to fill other pricing needs, such as a formula for the cost used to calculate Salesman Commissions.
Review these details before you set up your Price Rollup formulas to be sure that you are using the correct fields.Company Master Loaded Cost configuration
Calculate GP% from Cost Column
(C1 to C7)
Set to the Industry cost of the product (usually the C4 field), before the load percentage is added.
Calculate your Gross Profit before you add the percentage because the extra "load" that you are adding isn't considered profit.
Choose the same cost column for the Inventory Adjustment Cost Column (C1 to C7) field as well.
Dflt Customer Last Price Paid in S/O (Y)es/(N)o
Using loaded costs means that your price for the product may have changed since the last time the customer purchased it.
Set to "N" to prevent the Last Price Paid from automatically being used during Sales Order entry.
You can then choose the correct, up-to-date, price from the Pricing Window.
Inventory Adjustment Cost Column
(C1 to C7)
Set to match the cost column entered for Calculate GP% from Cost Column (C1 to C7), so that you are using the same column to calculate the value of your inventory and your Gross Profit.
User Defined Label for Cost Column C6/C7
Several fields under the Pricing/Costing tab in your Company Master can be adjusted to incorporate loaded costs into your pricing structure. This is especially important when it comes to calculating Gross Profit and Salesman Commissions.
Prompt to use Margin or Quoted Price in S/O Entry (Y)es/(N)o
Set to Y to automatically prompt you to select the Margin or Quoted price for products entered in a Sales Order. You can also click on the Detail tab in the Pricing Window to view the formula used to calculate the price used in the Sales Order.
Salesman Commission Cost Column
(C1 to C7)
Select the Cost Column that will be used to calculate the commission for each of your salesmen. You can choose to calculate commission from the Loaded Cost or from another cost column. For more information see About sales commission matrices.
If you do not want the loaded cost to be visible to your sales staff, you can use the Access Levels and User Master screens to require a higher access level to view these figures and formulas
- Create formulas for loaded costs
A typical pricing structure will set the C6 field equal to the cost of the product. This field is calculated from C1 (replacement cost), C2 (inventory weighted average cost), and C3 (cost plus freight). Using the Price Rollup Schedule, you can customize your own formulas for calculating the Loaded Cost for different Product Lines and Price Groups. Stay ahead of cost increases by also setting Future Price Rollup formulas that will automatically take effect on a selected date.
The Price Rollup Schedule allows you to account for loaded costs by adding an overhead percentage to the cost of the product. Each time the base cost of the product changes, this percentage will be recalculated and added to the base cost automatically, keeping the loaded costs for all products in the Price Group or Product Line up to date, without requiring you to look at each individual product.
Each Product Line or Price Group should have its own formula for calculating the loaded cost. Typically, the Loaded Cost (C6) is calculated by adding a load percentage (usually around 5.%) to the Standard Cost (C1). This may differ sightly in your own system. Once a formula is set, it will be used to calculate the Loaded Cost for all of the products in the group until you choose to change it.Set the loaded cost formula.
- Create a new Price Rollup Schedule as described in steps -3 of Set a price roll-up schedule for products
- Now set your schedule: locate the Loaded Cost price Column.
- Select the Base Field. For this example, base the Loaded Cost on the Standard Cost, which is kept in the C1 cost column.
- Click in the +/- column, to the right of where you entered the base field. This determines if you will add or subtract from the base field to calculate your Loaded Cost. The system defaults to a + here, and a % in the %/$ field beside it. This means that you will add a percentage of the base field to arrive at the Loaded Cost for the product.
- In the Amount field, type the percentage amount that you want to add to the base field in order to calculate the Loaded Cost, then press the Tab key.
- Click Save. Remember that this formula will only apply to products in the Price Group or Product Line that you selected.
To create Loaded Cost formulas for additional Price Group or Product Line, repeat this procedure.
- Update prices
Once you have set your formulas, the Loaded Cost field will automatically recalculate when the base cost field is updated via direct input to the Product Master, Mass Change, or Product Import.
When the distributors send you new cost prices, you will need to enter these into the system so that the formulas you set earlier in the Price Rollup Schedule can calculate an accurate cost and price for the product.See three ways to update costs for existing products
- Enter new costs directly into the Product Master for each product. This method is best if you only have a few products to update. See Add main product and price information.
- Use the Product Mass Change screen to compile a list of product and update a single cost field from one screen. This method is best if you have a select group –Product Line, Price Group, etc.–of products to update. To learn how to use mass update, see Update data in bulk using mass change.
- Perform a Product Import using an excel spreadsheet that your vendor provided. This method is best if you have a large number of products to update. See Import product information from a spreadsheet.
Once you update the prices, you can select the correct price to use in the Sales Order through the Pricing Window: see Specify the net price.