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Price Index Adjustment Revision

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Clients and individuals interested in how we work with pricing often have similar questions. Our new blog portal, written by our ClientCare associates, is our way of providing easily accessible answers to your questions. 

NOTE: Please be aware, this article is specifically about the “Price Index Adjustment” functionality in the Revision Module of Navetti PricePoint™ 4. The text might be confusing if you are not familiar with the Revision module, or the “Price Index Adjustment” functionality. I recommend pre-reading the following pages in our Information Library, to make yourself familiar with the discussed module and functionality:

We recently held a series of constructive discussions with some of our clients regarding price adjustments during the price revision period, and we understood there may be some confusion as to how the “Price Index Adjustment” in Revision module works, especially when combined with “Post-Conditions” in Price Rule.

If you have used Navetti PricePoint™ 4 for your annual price revisions [1] you will know that Target Prices of items can be adjusted easily during the revision period by using our “Price Index Adjustment” functionality in the Revision module. This is the third step in our 8-step best-practice revision process (read more by requesting a copy of Navetti’s Best Practice Price Revision white paper HERE).

One thing in the “Price Index Adjustment” functionality that was puzzling for some of our clients was that some of the items did not get their Target Prices updated according to the defined indices and the user expectations. However, in these cases, the users often forgot about the “Post-Conditions” that are defined in Price Rule of those items’ families.

Post-Conditions in price rules allow you to limit a Target price

  • In its absolute value, setting min / max limits
  • In relation to another Price in relative or absolute terms

So, in chronological order, what happens in Price Index Adjustment for an item that has a Post-Condition set for its Family Price Rule is

1. The system calculates and temporary saves the min/max values for the Post-Conditions based on the defined limits set in the Family Price Rule (Figure 1). These will be the values which the Target Price of the items will be checked against them later.

Figure 1: System calculates and temporary saves min/max values for the Post-Conditions

2. The system calculates the “Adjusted” Target Price based on the defined price rule and the adjustment index in the price rule (Figure 2)

Figure 2: System calculates the Adjusted Target Price

3. The system compares the calculated adjusted Target Price with the min & max calculated Post-Conditions for each item

  1. If the calculated adjusted Target Price meets the calculated min/max Post-Conditions for the item, the system saves the calculated adjusted Target Price as the new Target Price for the item
  2. If the calculated adjusted Target Price does not meet the calculated min/max Post-Conditions for the item, the system saves the min/max Post-Conditions values as Target Prices instead

Figure 3: System saves the Target Price for items based on the established min/max Post-Conditions limits

If some items meet the defined Post-Conditions and some don’t, what the user sees is an “inconsistency” in the updated Target Prices. This “inconsistency” may seem more confusing if the items that have not met the Post-Conditions limit on this revision period are the same ones that did not pass the limit for the previous revision either. In these cases, the user sees that the target prices for those items have not moved/changed at all; in both revision periods the same min/max value is saved as the Target Price for those items.

However, this is not an “inconsistency” at all, rather it is the way system is designed to work to ensure your business’s margin is maintained for all items based on the defined Post-Conditions.

So, if next time you see some of the Target Prices in your assortment have not yet been updated after the Price Index Adjustment, make sure you check the defined Post-Conditions in the family’s price rule and ensure the Post-Conditions are defined in the way that satisfies your business needs.

[1] If you have not yet used Revision module of Navetti PricePoint™ 4 for your annual price revision, probably you should start by reading our white paper on “Change the revision game”, in where we explained how Navetti PricePoint™, as a comprehensive pricing system together with its Revision Module, has truly changed the game when it comes to price revision. We at Navetti have supported our clients in defining and performing the price revision process within Navetti PricePoint™, resulting in a time reduction from 3 months to 3 hours.