Create Pricing Rules in ERPNext
The Pricing Rule feature in ERPNext is used to perform price adjustments or override the standard price list and define discount percentage based on several conditions. When those specific conditions are fulfilled, the respective price/ discount will be applied automatically. The price could be managed using different filters- like Quantity, Validity, Item Group, Supplier Group, Customer Group, etc. as per your requirement.
The Pricing Rule would allow the user to create various conditions as per their requirements in order to auto-apply the discount/ price list rate for an item thereon.
Creating Pricing Rule and Their Features
1. Navigate to Awesome Bar ➤ Type- ‘Pricing Rule List’ ➤ Click on Add Pricing Rule
2. Give your Pricing Rule a title.
3. Select the criteria on which the Pricing Rule should be applied - by picking the appropriate Item Code, Item Group, Brand or Transaction.
In our case, we have selected “Item Group” and selected “Products- Item Group” in the table.
( Note: If you want to apply Rule on all the items, you can select ‘Item Group’ and then Parent Group i.e. “All Items Group” in the table. Also if you wish to apply Rules on a Single item then select “Item Code” and Select the item in the table from the drop down. )
4. Price or Product Discount? Now you will have the option to choose from the drop down- whether it is a Product Discount or Price Discount.
Product Discount is chosen in the situation wherein you are giving products for free. For example - Buy 1 get 1 free scheme.
----- SET TO ONE -------
5. Party Information - You will get the drop-down to select the party information from two options - Buying or Selling. The applicability will be set to one of the masters based on your selection of the Party Information.
If you select the Buying - you would get the following criteria to choose from.
If you pick Selling - the applicable criteria could be chosen from the following.
In our case we have selected “Selling” and “Customer Group”, ‘Commercial’ as Party Information on which the Discount Rule be applied.
6. Quantity and Amount - under this section, you can define the minimum and maximum quantity or minimum and maximum amount conforming to which, the pricing rule will be applicable.
It will help the system auto-fill with the discount if the quantity or the amount falls within the defined limits. If the criteria won’t be met, no discount will be applied. However, it will be applied if you have enabled the options- Mixed Conditions or Is Cumulative.
7. Period Settings - This option would help you set the validity of the Pricing Rule. This could be specially used to promote offers/ discounts for specific time frames. You can freeze the period during which the Pricing Rule shall be applicable. If you do not wish to frame any time limit, this can be left blank.
8. Margin - This feature allows you to keep/set the margin on selling an item. If you don't want to add selling prices to Items every time and would like to automatically set a margin, it can be done with this feature. This can be based on percentage or fixed amount (e.g. 5% or INR 5000/-) as per the requirement.
9. Price Discount Scheme - Here you can set the actual pricing/discount rule to be applied using any of three criteria:
● Rate: To fix a new rate of an item based on customer or Customer group or territory, this can be used. Let us, take an example - if you want to sell an Item more than the selling price to a specific customer, then select Rate and set the Rate you wish to sell at.
● Discount Percentage: The Discount percentage can be fixed on a specific price list. If you want to apply a specified discount percentage on all Price lists, leave ‘For Price List column blank.
● Discount Amount: to provide the discount of fixed amount, select this option and specify the amount.
Mixed Conditions Pricing Rule in ERPNext
To offer a percentage discount on combo of items within minimum and maximum quantity limits, check this option to enable it. Discount Conditions will be applied on all the selected items in the table combined altogether and if the total quantity of Items matches to the criteria set for the quantities.
For example - If the total quantity of selected items (In our case- Macbook Pro and Plastic Chair) in an order falls between 20-30 Nos. the discount shall be applicable as per pricing Rule.
Is Cumulative Pricing Rule in ERPNext
By enabling this option the Pricing Rule applies cumulatively on compliance of defined amount transaction. To understand this more clearly, define the ‘Minimum Amount and Maximum Amount’ under Quantity and Amount Section.
If the first transaction equals to an amount lesser than the defined Amount limits then Pricing Rule will not be applied.
However, if the amount of another transaction on adding up to the previous transaction and total/cumulative amount falls under defined/set amount values, the Pricing Rule will be applied to the latest transaction.
In other words, the discount percentage/ rate will be applied only to the latest transaction which helps in crossing the Is Cumulative limit.
To understand better, consider a scenario where the Min Amt is 6,00,000 and Max Amt is 10,00,000 for a particular item ‘Air Conditioner’. Now, if one transaction is created for 5,00,000 then the Pricing Rule will not be applied.
However, on creating a second invoice of the amount 1,00,000 Pricing Rule will be applied. This happened because the total or the cumulative amount of all the invoices added up to 6,00,000.
Please note that the discount would only be applied to the latest transaction that crosses the cumulative limit.
Price Rules Advanced Settings in ERPNext
● Threshold for Suggestion: Users can use this feature if they want the system to notify you to adjust quantity or amount to avail discount based on Threshold.
For example, the Threshold is defined 9 and the Min Quantity for discount is 10, the system will notify the user to add 1 more unit to avail discount. The threshold for amount works in a similar way.
● Priority: Take an Item Group, now let us assume you want to set specific rules on one Item from the group. This can be done by creating a new Pricing Rule and setting a higher priority. This can also apply to Customer Group and Supplier Group.
● Apply Multiple Pricing Rules: This feature enables multiple pricing rules on an item. It means if there are more than one Pricing rule on an item.
For example- 10% Discount on Item XYZ (having Selling Price of 1000/-) and another Rule specifies 5% Discount on the same item. The system shall auto apply both discounts and customers get benefitted by 15% discount on Item XYZ which is 150/-.
● Apply Discount on Rate: If checked the discounts will be compounded. To understand this consider the scenario as above. On enabling this option, 10% discount will be applied on 1000/- and then the 5% will be applied on 900/- (1000-10%), which will give a selling price as 855/-.
● Validate Applied Rule: The validation message gets displayed if the discount/rate set manually by you in a transaction does not match with the Pricing Rule.
To wrap up, Pricing Rules are considered to be an essential part of the ERP system, and ERPNext provides its users with a comprehensive set of tools to cater to the diverse pricing needs.
Implementing pricing rules enables businesses to streamline their pricing process, leading to time savings and potential sales growth. The sheer flexibility and configurability of ERPNext pricing rules makes them a great choice for businesses of all sizes and domains.
It is also important to note that pricing rules should always be periodically reviewed and updated to make sure they align with business targets and current market trends.
With ERPNext, businesses could be rest assured that their pricing strategies are in safe hands.
Want to learn more about ERPNext? Want to know how it can benefit your business? Book a free consultation with us now and get answers to all your curious questions.
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