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Base price versions (preview)

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[This article is prerelease documentation and is subject to change.]

This article describes how base price versions work in Pricing management. The primary purpose of a base price version is to maintain a list of item base prices for a specific period. The base price is a common price at the level of the stock keeping unit (SKU). Pricing management lets you build selling prices by using cost-plus pricing. When you use cost-plus pricing, you first build a price structure that starts with the base price.

The following tables shows an example of a price structure that can be used to build final selling prices based on base prices.

Pricing sequence Price component code Price component type Description Price details on the sales order
10 BAS01 Base price

Price component code BAS01 must be associated with one of the following price component code types:

  • Base price – inventory price
  • Base price – purchase price
  • Base price – cost price
 Base price
20 MAC01 Margin component Adjust the price up or down based on a fixed amount or percentage. Price adjustments
25 MAC02 Margin component Adjust the price up or down based on a fixed amount or percentage. Price adjustments
30 MAC03 Margin component Adjust the price up or down based on a fixed amount or percentage. Price adjustments

The selling price is calculated by using the following formula: Selling price = Base price ± Margin component price adjustments.

Determining the base price

The cost-plus pricing model works by determining the product cost and then adding a markup to determine the selling price.

  • In retail and distribution industries, many products are items that are procured and then sold to customers. For these industries, the base price is typically the procurement price for a product.
  • In the manufacturing industries, the base price is typically based on the calculated total cost of the bill of materials (BOM) for a product.

Pricing management derives base prices from one of the following two sources:

  • The primary source is the item base price that's listed for each product on the Item base price page. To open this page, go to Pricing management > Pre-sales pricing > Base price versions to open the Base price versions page, which lists the base price versions that you've created and shows the dates that each version is valid for. Select a version in the list, and then select Price > Base price on the Action Pane to view and edit the prices that apply for that version.
  • If an item doesn't have an active item base price, the system determines whether it has an active cost price in a costing version. A costing version can support a standard cost inventory model for items, where the costing version contains a set of standard cost records about the items and their manufacturing processes.

The following table shows the rules for determining the base price.

Product type Industries How base prices are determined
Traded items that you procure and then sell Retail, distribution
  • Pricing management calculates item base prices based on prices that are found on the Base price versions page.
  • Item base prices are calculated by using the following formula: Base price = Vendor list price ± Vendor price term agreement.
  • If several calculated prices apply to the same item, the price engine always selects the lowest price as the item base price.
  • You can activate a calculated item base price. The price engine will then use that calculated price as the base price.
Manufactured items (with BOMs) that use the standard cost model Manufacturing
  • Microsoft Dynamics 365 Supply Chain Management can calculate and activate item cost prices based on costing versions.
  • Item base prices don't have to be maintained on the Base price versions page.
  • The price engine will use the active item cost price as the base price.
  • Item selling prices are calculated by using the following formula: Selling price = Active calculated item cost (base price) ± Margin component price adjustments.
Manufactured items (with BOMs) that don't use the standard cost model Manufacturing
  • Item base prices are defined on the Base price versions page.
  • The price engine will use the active item base price as the base price.

Base price determination exception

As has been mentioned, the base price is a common price at the SKU level. A price differentiation strategy is often applied when a price manager negotiates with a customer to set up a special price for a specific group of products for a specific date range. These prices should be recorded as sales trade agreement prices. Sales trade agreement prices take priority over base prices.

The following table shows how sales trade agreements are related to selling prices.

Do applicable margin component price adjustments exist? Sales price calculation
No Selling price = Sales trade agreement price
Yes Selling price = Sales trade agreement price ± Margin component price adjustments

Note

To use sales trade agreement prices, your price structure must include a price component code where the Price component field is set to Sales trade agreement.

The following tables shows an example of a price structure that includes a sales trade agreement.

Pricing sequence Price component code Price component type Description Price details on the sales order
10 BAS01 Base price Price component code BAS01 must be associated with one of the following price component code types:
  • Base price – inventory price
  • Base price – purchase price
  • Base price – cost price
 Base price or Sales trade agreement price
15 TAM Sales trade agreement Sales trade agreement Base price or Sales trade agreement price
20 MAC01 Margin component Adjust the price up or down based on a fixed amount or percentage. Price adjustments
25 MAC02 Margin component Adjust the price up or down based on a fixed amount or percentage. Price adjustments
30 MAC03 Margin component Adjust the price up or down based on a fixed amount or percentage. Price adjustments

For example, when this price structure is used, the price engine might find that the following pricing rules are applicable to item EV0001 on a sales order line:

  • Activated item base price (BAS01) = $5
  • Posted sales trade agreement journal price (TAM) = $8
  • Margin component price adjustment (MAC01) = $3
  • Margin component price adjustment (MAC02) = $2
  • Margin component price adjustment (MAC03) = -$1

Therefore, the selling price for the sales order line is 8 + 3 + 2 – 1 = $12.

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