Use Price Margin Caps to set limits on how high your margins can go, regardless of your Pricing Method. You can set margin caps by a variety of methods, including product line, customer, or vendor in a manner similar to the Price Matrix. Once set, margin caps prevent the price from ever exceeding your specified cap amount.
You can also exclude customers and/or products based on simple rules, such as setting a margin cap for a group of products with the exception of specific customers or branches.
This process enables you to reduce unintentionally high margins caused by pricing errors, help maintain a price ceiling in a competitive market, and reward good customers with consistently low prices (while still claiming high margins on walk-ins).
Note: By default, margin caps will not override Price Contracts or Customer Price Matrix Levels, unless you change this setting in the Company Master's Pricing/Costing tab, Margin Cap Price Overrides Contract Price & Customer Price Matrix Price.
Create a margin cap program
- Go to Sales > Pricing > Price Margin Cap.
- Click New,
- In the Margin Cap box, type a name for the margin cap you are creating, and then press the Tab key.
- In the Description box, type more detailed information.
- If applicable, choose an Effective Date and/or an Expiration Date to set the time frame during which this margin cap will be in effect.
- The Cost Column list defaults to the cost column set for sales orders. (File > Company > Master: Pricing/Costing, Sales Order GP% Cost Column).
The margin cap program must calculate on the same cost field as your sales orders (C1-C7), and therefore should not be modified. If you plan to switch to a new Sales Order cost in the future, then you can use this option to set your margin caps ahead of the change, making sure you set the correct Effective Date.
Rebate and calculated costs are not used.
- Now set your margin caps:
Under Scale, click Add Scale and then set the cost breakdowns and associated gross profit percentages for this margin cap program. The G/P Percent applies up until the amount in the Cost column is reached. In the sample below, when the product cost ranges from $0.00 to $349.99, the GP percent is capped at 45% (and thus cannot exceed 45%). Similarly, when the cost falls between $350.00 and $599.99, the GP percent is capped at 40%.
- Click Save.
By default, this margin cap will apply to all customers and products. You may however specifically exclude certain customers and include specific products as described below.
Exclude or include customers or products from the margin cap
Control the application of a margin cap by excluding specific customers and/or products that meet criteria. Keep in mind when setting a customer property or product property all properties must be set to the same choice of Include or Exclude.
For example if you have Customer Categories excluded, then Customer and Branch must also have Excluded selected with no selections.
Exclude customers or products from the margin cap
When you exclude customers or products, you essentially apply the margin cap to all customers and products that are not excluded. Therefore. do not set more than one type of exclusion rule for customers (customer, category, or branch) and/or one for products (product line, product, vendor, or price group.
- Search and open the Margin Cap you want to modify.
- Click Edit.
- In the center panel, click the tab representing the customer data you want to exclude: Customer, Category, or Branch.
- From the Exclude/Include list, choose Exclude.
- Click Add, and then type the ID of the data you want to exclude, Repeat for each line of specific data to exclude as well as each customer property.
- Then in the far right pane, click the tab representing the product with which properties you want to exclude: Product, Product Line, Price Group, or Vendor.
- Click Add, and then type the ID of the data you want to exclude, Repeat for each line of specific data you want to exclude as well as each product property.
- Click Save.
The specific customers and/or products that meet the criteria you selected will be excluded from the margin caps you set.
Include specific customer and/or products in the margin cap
Follow the procedure above, but in step 4, select Include. Note that you must either Include or Exclude each property. You cannot mix and match. For example, under Product Line, you cannot include Equipment and then exclude Service.
Include always takes precedence over exclude. So if you include a Customer, but exclude a Product Line, the included Customer will include products in that excluded Product Line.
Tips on setting up your include and exclude rules
Is your margin cap specific to:
- One customer or a group of customers?
You may have a number of good customers whom you want to avoid overcharging: Include these specific customers in the margin cap.
- All or most customers?
For walk-in or bad customers whom you do not want to cap, exclude these customers from the cap to have them pay standard pricing and margins.
Is your margin cap specific to:
- One vendor or a group of vendors?
Set Vendor to Include and add the vendors you want the margin cap to apply to (this could apply to vendors that have highly competitive prices in the region).
If so, note that you cannot exclude products from a vendor that has been included.
You may, however, include products from vendors that you have not already included.
- All or most vendors?
Set vendor to Exclude and specify the vendors that you do not want the margin cap to apply to. Products with more than one vendor will need all vendors linked to that product to be Excluded or the product will not be capped.
Note that it is not possible to exclude products in addition to a vendor, price group, or product line exclude.
Report on price margin cap programs
- To see a report of existing margin cap programs, including effective and expiration dates, click Report.
- Click Report.
- On the Field Selection pop-up that appears, you can choose which fields appear. Drag the fields into the Print Order area, and then click OK.
- On the Print Document pop-up, click View.