We have read about basic of component based prcing in last article. The first scenerio of Fixed pricing where customizable product has a fixed price, changes in the components will not affect the price was fairly described in last article. In this article we will discuss Roll-Up Pricing.
Roll-Up prices is approximately the opposite of the Fixed Price approach. With Roll-Up Pricing, the Root CxP product has a price of zero. It is the selection of components that makes up the Price of the entire product structure. This approach is preferred when a product has many components that affect the final price of the Root product. I’ll keep the example of my laptop computer. I have added a new component called “Base Configuration” and have added more components and changed the relationships. This is the new product structure.
Again, all products in bold are default components (and can be changed for another option) The 2 GB and the Docking Station have a discount if you buy them with the Valoris BL 1600 laptop. If you buy them separately, you will pay the List Price. You then add these products to your Price List with their respective List Price. The Price List should look like this:
Every product has a Price except the root CxP product. The CxP will roll-up the prices of each selected components. We will know discover the use of Adjustments in the Pricing Designer. Our adjustments will be as follow:
- You’ll get 10% discount for “RAM 2 GB” if bought with the “Valoris BL1600” laptop
- 25% discount to the “Docking Station” if bought with the “Valoris BL1600” laptop
- 10% for the “160 GB 7200 rpm” when bought with the “Valoris BL1600” laptop
- 15% for the “160 GB 7200 rpm” when bought with the “Docking Station”
Click on the “Valoris BL 1600” hyperlink to open the Pricing Designer. In the Pricing Designer, add the required adjustments. To apply the 10 and 15% discount on the “160 GB 7200 rpm” hard disk you must look at the Parent Product field in the Pricing Designer. The Pricing Designer should look like this: There are 4 important information on this View:
- The Start Price is still $1000. It was calculated by the Pricing Engine as follow:
|Default Products:||List Price||Adjustment from the Pricing Designer||Adjusted List Price|
|Memory (RAM 2 GB)||$45||10% Discount||$40.50|
|Hard Disk (160 GB 7200 rpm)||$50||–||$50|
|LCD Panel (XGA Panel)||$200||–||$200|
|Optical Drive (DVD/CD burner)||$50||–||$50|
- The Docking station has a 25% discount if it is purchased as part of the “Valoris BL 1600” product configuration (note: you can consider this as a flexible bundle!). è If you buy this product separately, you will not get the discount.
- This popup applet is shown when you press the “Verify Adjustments” button. It shows a history of prices for the product. è “Component-Based Pricing Chapter 2” will explain how the start/end dates of products, Price List, Price List Item and Pricing Designer affect price calculations. What is important here is the 2 last columns: Base Price and Reference Price.
- The “Base Price” is the price you will see in the Order if the product is bought separately.
- The “Reference Price” is the price you will see in the Order if the product is bought as part of the CxP product structure. The Reference Price includes Price Adjustments you have defined in the Price Designer.
- The hard disks appear twice in the Pricing Designer. That is because you can buy a hard disk for the laptop but also for the docking station (secondary hard disk). You can differentiate the hard disks by looking at the field: “Parent Product”. Here the parent product for the hard disks is either “Docking Station” or “Valoris BL1600”. The Pricing Manager allows you to define different Price Adjustments for the same product, assuming you create the appropriate relationships in eConfigurator (here, the hard disks belongs to 2 different relationships: one with the laptop and one with the Docking Station)
Finally let’s have a look at the Order:
- The “Rollup Amount” shows for every CxP product the sum of the Start Price of all child products (components)
- The “LOY Rollup Item Price” is a field that I have manually exposed; those of you who use Siebel Loyalty will recognize it. It is a very useful field and can be used beyond Siebel Loyalty. It shows the price of the CxP plus the rollup of the child product. The Valoris BL1600 has no list price, so the “LOY Rollup Item Price” is identical to the “Rollup Amount”. Have a look at the Docking Station product. Its price is $90. the price of its components (the hard disk and the Raid controller) is $112.5. So the total (unit) price of the Docking Station is $202.50
- The “Extended Rollup Line Total” is again a field that is unfortunately not displayed by default. I have exposed it here to show that “Component-Based Pricing” completely supports Extended Qty functionality. I have ordered 2 laptops and 2 times 2GB of RAM. So the extended Qty of the RAM is 4 items. You will notice that components also have a price. They shouldn’t. Since they are not CxP, they should not have Rollup figures. This is a very tiny bug that can be easily fixed by changing the “calculation value” logic in the Buscomp.
- To show the effect of Component-Based Pricing, I have added the 160 GB hard disk in 3 different ways:
- I have added it as part of the Laptop configuration. è It gets the 10% as specified in the Pricing Designer (the reference price is applied)
- I have added it as part of the Docking Station configuration è It gets the 15% as specified in the Pricing Designer (the reference price is applied)
- I have added it as a stand alone purchase è It doesn’t get any discount because it is not part of a CxP configuration so there is not Pricing Designer adjustment to apply (Base Price)
By the way, have you noticed that we have just implemented BOM Pricing 😉