Global Effective Pricing Summit

Mar 09, 2017 – Mar 10, 2017

Join us at the Global Effective Pricing Summit in Barcelona on 9 – 10 March, where Andreas Westling, CEO of Navetti, will be presenting a case study on Pricing for Business Advantage.

Click here for more information.

KIT and BOM pricing in Navetti PricePoint™

KIT and BOM pricing in Navetti PricePoint™

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. 

In today’s post we discuss the logic we use to price KITs or BOMs within Navetti PricePoint™. 

Since the logic behind pricing a KIT and a BOM could be quite similar** (e.g. summing up the price of the items that each KIT/BOM contains, and possibly adding few percentage for the assembly effort for BOM items, or reducing few percentage for bundling price of a KIT), the pricing of a KIT and a BOM in Navetti PricePoint™ is handled in the same way; meaning the price of an item which is a KIT or BOM can be calculated based the value of the items inside the KIT/BOM (i.e. children items).

The procedure can be summarized in four steps:

1-      Define whether an item is a KIT/BOM or not

2-      Define the parents and children of the item (this is referred to as “BOM structure” in Navetti PricePoint™ terminology)

3-      Define how the value of the KIT/BOM should be calculated (this is referred to as “BOM Valid” in Navetti PricePoint™ terminology)

4-      Use BOM Valid in the pricing rule of KIT/BOM items for calculating the Target Price

To Navetti PricePoint™ users looking for more extensive information on the above steps, please look at our Information Library here.

** In this article BOM and KIT are differentiated. BOM or Bill of Material is discussed from a manufacturing process, wherein a list of multiple items need to be assembled together in order to make the final product. In this definition, the items used in assembly are not considered as final products, rather as spare parts of the final product. KIT, however, is discussed from a sales process in where multiple items, which each of them can be considered as final product by itself, are bundled in a package with special price as incentives for sales [1].

[1] https://www.greytrix.com/blogs/sageaccpacerp/2014/02/28/bom-and-kit-understanding-the-basic-difference/

Our Navetti ClientCare™ professionals are always available to answer any questions, should you need additional help.

If you have a topic you would like us to cover in our next ClientCare Column, please forward your request to Arsham.mazaheri@navetti.com

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Arsham Mazaheri
Head of ClientCare

+46 (0) 70 032 63 79

arsham.mazaheri@navetti.com

Navetti PricePoint™ 4.7 Makes Its Much Awaited Debut

Navetti PricePoint™ 4.7 Makes Its Much Awaited Debut

Navetti PricePoint™ is our highly acclaimed software suite for operational pricing and price optimization. It enables our customers to improve their business results by working better and smarter with value-based pricing. Navetti PricePoint™ helps them understand the pricing dynamics in each product category, monitor developments in the different markets and define prices against local market conditions. And then to review and adjust prices over time against market and customer developments, with minimum effort and as frequently as desired, so that price management can become a competitive tool that creates true business advantages.

We have now released the latest version of Navetti PricePoint™ 4.7, and we are proud to share with you some of the exciting new features available to our clients.

  • Users can access new Import Templates and Setup Wizards, enabling smoother configuration and management of the system for an even better user experience.
  • The use of new, dynamically calculated columns and internally calculated prices, as well as run-time calculated prices and numerical values, gives our clients enhanced all-round business support.
  • New state-of-the-art security technology for all SaaS environments.
  • A range of new applications available in the Navetti AppStore, providing easy access to all the tools our clients need for day-to-day successful pricing and price optimization.

These are just some examples from the extensive list of new features and improvements in Navetti PricePoint™ 4.7. For more information about the new features or about Navetti PricePoint™, call us today at +46 8 44 00 120 or request an invite to the upcoming free Navetti PricePoint™ 4.7 Webinar by emailing us at info@navetti.com.

Price Index Adjustment Revision

Price Index Adjustment Revision

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.

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Arsham Mazaheri
Head of ClientCare

+46 (0) 70 032 63 79

arsham.mazaheri@navetti.com