The Price Matrix

The Price Matrix


Overview

The Price Matrix allows businesses to incorporate very complex pricing structures in CustomBooks™, giving users granular control over pricing using Item Categories, Customer Price Levels, and Dates which provides flexibility. The software also has the ability to combine these factors to create precise pricing structures that your business needs for both service and product items. The price matrix determines the price that will appear on the any sales documents upon creation, by looking at the entries (price rules) in the price matrix. It’s calculated by determining the price for the category of the item, the price level of the customer and the date of the document.

Price Types

There are four Price Types in the Price Matrix:
  • Item Category: Applies specific pricing to an Item Category.
  • Item + Price Level: Applies a specific item price to a grouping of customers which have been assigned a Price Level.
  • Item: Applies a specific item price with a start date for use in Future Pricing.
  • Item Category + Price Level: Applies specific pricing to an Item Category when sold to a customer in a given Price Level.

For ease of explanation, the above descriptions refer to sales but the Price Matrix is used to calculate prices on Sales Quotes, Sales Orders, Sales Invoices and Cash Sales.


Item Categories and the Price Matrix

An Item Category is used to group products for the purposes of pricing and reporting. An item may be included in one category. You can use the Price Matrix to price items based on their category. Please see the Item Category article for more information. The below example illustrates the use of the Item Category.


Using Item Categories with the Price Matrix
CD Shack is a company that has 10,000 CDs from a variety of musical artists.  Each CD title is tracked as an inventory Item in CustomBooks™. They charge $9 per CD. The day comes when Brian, the CEO of the company decides to raise the price of all CDs to $10. Mary, the company’s bookkeeper, is not happy because now she thinks she needs to go into the software and change the price from $9 to $10 ten thousand times, one for each title. She did the math and discovered that this would take 28 hours of nonstop, repetitive work. In reality, Mary is lucky because when CD Shack started using CustomBooks™, they used the Item Category feature and assigned each of these 10,000 titles a category in the software. They then used the price matrix to assign all items with this category a price of $10. Because of this foresight and CustomBooks™’s Price Matrix, Mary needs only to change the price in one place – the Price Matrix. She’s changing the price of the product category which affects how each individual CD is priced upon sale.

Setting up the Item Category and Price Matrix

Item Category Setup:
  1. If there is not one already created, create a category to group the products. Go to Inventory > Item Categories > Create > New.
  2. Assign the category to the applicable Items in inventory. Go to Inventory > open the Item card > Category.


Price Matrix Setup:
  1. Navigate to Sales > (Tools) Price Matrix > Create.
  2. Choose the Price Type: Item Category.
  3. Enter the Start Date.
  4. Enter the Item Category.
  5. Enter the Price per Base Unit.
  6. Save/Save and Close.


All items with this category will appear on Sales Quotes, Sales Orders and Sales Invoices at the price specified. Any changes made to the Price Matrix will affect the items with the category when added to new documents. New rules in the price matrix will not affect previously created documents.

Price Levels with the Price Matrix

Using Price Levels with the Price Matrix allows for tiered pricing based on a grouping of customers. Customers are associated with a Price Level and then pricing is calculated using an Item + Price Level rule in the Price Matrix. The example below illustrates the use of this feature.

Using Price Level with the Price Matrix
Joanne runs a high-end fabric shop. She has a very large client base and is known for treating her customers well who shop often and have been clients for a long time. Her generosity comes in the form of discounted pricing to these customers. She utilizes the Price Matrix in combination with Customer Price Levels to price her products based on groupings of her customers. Her standard price is $40, her Platinum (Price Level) clients get fabric for $35 per yard, $5 less. Her Gold (Price Level) Customers receive fabric at $36, and her Silver (Price Level) ones for $37. See below for steps to set up this scenario in CustomBooks™.

Setting up the Price Matrix using Price Levels

Price Level Setup:
  1. If one has not already been created, create a Price Level. Go to Lists > Price Levels > Create > New.
  2. Assign each of the applicable customers the Price Level. The Price Level is assigned on the Company card (Customer/Vendor). Go to Lists > Companies or Customers/Vendors > open the company card > click the Financials tab > assign the Price Level.



Price Matrix Setup
  1. Navigate to Sales > (Tools) Price Matrix > Create.
  2. Choose the Price Type: Item + Price Level.
  3. Enter the Start Date.
  4. Choose the Item.
  5. Choose the Price Level from the dropdown list.
  6. Enter the Price per base Unit.
  7. Save/Save and Close.



These examples illustrate how one may use the price matrix to simplify the order/invoice/receipt process while maximizing profits and avoiding unnecessary data entry. Now let’s get into the real power of this amazing tool and look at an example that combines Item Category and Price Level.


Price Level and Item Category with the Price Matrix

You can combine Price Level and Item Category with the Price Matrix. See the example below for illustration.

Combining Item Category, Price Level and Dates with the Price Matrix
Back at Joanne’s fabric shop, she carries many different styles of fabric and has grouped them into 42 different categories. Each item in a particular group has similarities, including what she charges for the item. We know from our earlier example that she has 3 Customer Price Levels. We’re going to throw both of these into the mix and add an October sale on top.  Here are the steps to achieve a completed price matrix.

Setting up the Price Matrix using Item Categories and Price Levels

Step 1: Ensure Items have the appropriate item category assigned and that Price Levels are assigned to customers.




Step 2: Setup the Price Matrix.
  1. Navigate to Sales > (Tools) Price Matrix > Create.
  2. Choose a Price Type: Item Category + Price Level.
  3. Enter the Start Date that the pricing rule will be in effect. Two rules with different start dates may be entered, results in a time-based price change. For example, Joanne will enter a start date of today for the normal pricing and a second matrix record that lowers the price for the month of October.
  4. Enter the first Category.
  5. Enter the first Price Level.
  6. Enter the Price in the Price UM.
  7. Click Save and Close.
  8. Repeat these steps for each combination of Category and Price Level.



Better yet, use the copy or duplicate entry feature in the More Actions button and it will copy the entry or right click the Price Matric entry then select Copy (F9). Just make the necessary changes to price and date and it’s done!

Remember: In the Price Type field, choosing Item results in a single price for an item. Choosing Item Category will price all items within the category. The Price Level choice uses a customer’s entered Price Level. Finally, Item Category + Price Level will use both factors when determining pricing on an order, invoice or sale.

Now we’ll go back and create three more records, each of these having the same information as the previous three with the exception of the Start Date and the Price. This will automatically adjust the prices for her Deluxe Fabrics for her October sale. Below are the entries discussed so far in this matrix.

Setting up Future Pricing using the Price Matrix

If you know ahead of time that the price of a product will be changing, it can be set up to automatically change on a date specified in the Price Matrix.

To set up pricing based on date:
  1. Navigate to Sales > (Tools) Price Matrix.
  2. Choose Item from the Price Type toggle.
  3. Enter the Date of the price change.
  4. Enter the Item.
  5. Enter the Price per Base Unit.
  6. Save and Close.

Conflicting Price Matrix Entries

In some cases, there may be conflicting price rules in the price matrix. If this is the case, some rules will have priority over other rules. The ranking of priority of the factors is as follows (first having the highest priority):

  1. Item + Price Level.
  2. Item.
  3. Item Category + Price Level.
  4. Item Category.

In other words, the rule closest to the top of the list will apply for a sale with conflicting price matrix rules.


Reporting

For reports that use price in calculations (i.e. Inventory Valuation Report) the average price on the item card is used. The price matrix entries are ignored.

How-to Video

We’ve prepared a short how-to video that demonstrates how to set up and utilize the CustomBooks™ Price Matrix effectively. In this video, you’ll learn step-by-step instructions for creating pricing structures, defining Price Level, and maximizing the benefits of this feature.





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