Tuesday, May 15, 2012

Overview of Oracle Advanced Pricing

Oracle Advanced Pricing supports e-business applications by providing a flexible pricing engine that executes pricing and promotional calculations for Oracle Order Management and other Oracle Applications. This application is licensed as Oracle Advanced Pricing.

Oracle Advanced Pricing provides the flexibility to meet the needs of complex pricing situations for a range of demanding industry business requirements which include:

■ Consumer goods, telecommunications, services, high technology, automotive, and aerospace/defense
    businesses which sell to other businesses.

■ Telemarketing, mail order catalog, and web store businesses which sell directly to consumers.

With Oracle Advanced Pricing, you can perform the following functions:
  1.  Set a list price for an item or item hierarchy
  2.  Set a list price based on volume breaks
  3.  Usage Pricing / counter price - calculate price based on usage brackets
  4.  Point break (all quantity in one bracket)
  5.  Range Break (quantity in each bracket gets the price of that bracket)
  6.  Set a list price/ discounts at multiple levels of flattened hierarchies and use  precedence to select   the right price/discount.
  7.  Dynamically calculate the price based on simple or a complex formula
  8.  Define a formula to create a price relation (price of item A is Price of Item B + $20)
  9.  Create multiple currency conversion criteria for a single base currency price list
  10. Set up GSA prices
  11. Define pricing agreements
  12. Get a price/discount from an external source (my price = competitors price- 5%)
  13. Set a percent/fixed/lump sum discount or surcharge
  14. N-Dimensional Pricing (if width between 2-4 and thickness between 1-3then multiple the price by 0.3)
  15. Benefit/surcharge based on total volume of multiple order lines of the same order
  16. Set up deals and promotions
  17. Buy one get one free
  18. Coupon issue (Buy over $1000 and get a coupon of $100 for future purchase)
  19. Issue gift-certificates
  20. Other item discount (Buy A and B get 20% off on C)
  21. Item Upgrade (For the price of 12 Oz. Shampoo get 16 Oz. Shampoo)
  22. Terms upgrade (Buy over $100 and get upgraded to air shipment)
  23. Set discounts as “to be accrued”
  24. Set up freight and special charges
  25. Mark discounts as exclusive or incompatible to each other
  26. Create Cascading discounts (discounts to be applied on subtotals)
  27. Set spending and usage constraints to stop application of promotion when limit is reached
  28. Query on multiple modifier criteria across all modifier setups
  29. Create your own eligibility conditions by grouping the qualifiers
  30. Define your own qualifier and qualifier sourcing rules (if today = Sunday then give 10%)
  31. View the criteria that the engine uses to select price and modifiers for a pricing request
Oracle Advanced Pricing and its pricing engine work through open, business object oriented APIs. The following Oracle Application suites use the pricing engine:

■ Oracle Order Management
■ Oracle Customer Relationship Management

The Pricing Concept

The pricing engine receives transaction information, prepares pricing requests, selects price lists and modifier lists, and applies price adjustments (benefits) to the transaction.

The pricing engine, displayed in the graphic below, answers the following questions as it determines a price:

■ Who qualifies for prices and benefits?

■ What is the product hierarchy and what pricing attributes pertain to this item or service?

■ How should I adjust the order price or order line price?

The following diagram shows the elements of the pricing concept:
■ A sales order
■ The qualifier hierarchy
■ The pricing request
■ The pricing engine
■ The list price and adjustments
■ The setup entities: Price lists, qualifiers, modifiers, products, formulas, and pricing attributes

After the diagram, the text explains these elements.
Who Qualifies?
Pricing qualifiers control who is eligible for certain prices (price lists) and benefits

What is the Product Hierarchy and Pricing Attributes?
The product hierarchy and pricing attributes control what is being priced or modified
on a price list or modifier list.
An example of a product hierarchy with pricing attributes is All Plastic items of
Grade B quality get 50% discount.

How Should I Adjust the Price?
Pricing modifiers control how a modifiers affect the final price (selling price).
Some example modifiers are:
■ Discount of 2%
■ Buy 1 get 1 free
■ Get 480 ml shampoo for the same price as 360 ml shampoo
■ Get a coupon for 100 currency units if you buy over 1000 currency units

The Pricing Engine

The advanced, flexible pricing engine performs pricing and benefit calculations for
Oracle Order Management products and Oracle Customer Relationship
Management products through open APIs.
The pricing engine performs the following functions:
■ Prepares the price request structure
■ Selects applicable price lists and modifier lists
■ Determines base list price
■ Calculates final selling price
■ Applies benefits and surcharges (from modifier lists) to list price to determine
   selling price

Pricing Components

Qualifiers control who receives benefits. They can assign discounts and promotions to:

■ Specific customers
■ Customer groups
■ Order types
■ Order amount
■ Specific customer or group of customer

Qualifier Groups
Qualifier groups allow you to group multiple conditions and to assign them to a single benefit. For more information.

Pricing Attributes
Pricing attributes control what is being priced or modified on a price list or modifier

Price Lists
Price lists contain prices and currencies associated with products and services. Each
price list contains basic header information with one or more item lines. Price lists
can have:

■ Prices for specific products and services or for product groups
■ Prices as absolute values, percents of other prices, or as formulas
■ Prices applicable to the entire organization or to one operating unit
■ Negative prices

Pricing modifiers control how the pricing engine can modify the pricing requests
and pricing request lines. The modifiers are:

■ Discount: Reduces the price by a fixed amount or percentage or provides a new price.

■ Surcharge: Increases the price by a fixed amount or percentage or provides a new price.

■ Item upgrade: Replaces an ordered item with another item for the same price as the original item.

■ Other item discount: Gives a price adjustment or benefit to a specified item on an order when the
   customer orders one or more specified items on that same order.

■ Coupon: Issues a coupon as an offer of discount on other goods and services which is redeemable
   on a future pricing request.

■ Terms substitution: Upgrades payment, shipping, and freight terms.

■ Freight/Special charges: Charges for shipping and miscellaneous situations, for example, duty,
   handling charges, and insurance

■ Promotional goods: Adds a new item to an order and gives this item a price adjustment or benefit
   when the customer orders one or more specific items on the same order.

■ Price break: Applies a variable discount or surcharge price adjustment to a pricing request based on
   the break type and condition met. You can use both point- and range-type breaks.

The following table shows scenarios with examples of the qualifiers, modifiers, and
pricing attributes that support them:

Pricing formulas allow the pricing engine to determine item prices based on the
■ A combination of pricing attributes and factors based on the value of a pricing
■ The list price on the price list line to which the formula is attached
■ The list price on any specific price list line
■ A numeric constant
■ A customizable function

You can also attach a formula to a modifier line for the pricing engine to use to
calculate discounts.

You can use two types of formulas:

Static: You specify the formula and execute a concurrent process which calculates absolute price 
Dynamic: You specify the formula and the pricing engine uses the formula in itscalculations each   
   time that someone orders the product.

Pricing Service Items
The pricing engine prices service items in the same way that it prices inventory items. In Oracle Order Management, the parent item is the serviceable item and must be in the install base. Oracle Order Management passes both the serviceable item and the service item to the pricing engine; the pricing engine first prices the serviceable item and then prices the service item.

You can price service items as follows:

■ Unit price: You set a list price for the service item.

■ Percent price: You set a percentage; the price of the service item is that percentage of the serviceable 
   item list price.To use this method, select the flag Service Item in the Service tab when you define the 

When pricing service items, attend to the following order management attributes
when pricing service items. They are passed through the pricing engine application
program interface (API):

■ Ordered Quantity (API: P_Line_Tbl.Line_Quantity): The order quantity of the service item expressed   
   in the in the serviceable item unit of measure.

■ Ordered UOM Code (API: P_Line_Tbl.Line_Uom_Code): The unit of measure in the time scale.

■ Service Duration and Service Period (API: P_line_Tbl.UOM_Quantity): The duration of the service 
   being ordered, for example, to order Computer Maintenance for one year, set Service Duration to 1 
   and Service Period to Year. You set these values in the Service tab when you enter the item in the 
   order. In the API, P_line_Tbl.UOM_Quantity is the service duration expressed in Ordered UOM 
   Code service period.

Oracle Order Management Service Item Pricing Example

Price list setup for laptop computer:
■ Product: Laptop Computer
■ Application Method: Unit Price
■ UOM Code: EA
■ List Price: 1000 currency units

Price list setup for computer service—unit price method:
■ Product: Computer Service
■ Application Method: Unit Price
■ UOM Code: Month
■ List Price: 10 currency units

Price list setup for computer service—percent price method:
■ Product: Computer Service
■ Application Method: Percent Price
■ UOM Code: Month
■ Percent Price: 2

Order line:
■ Product: Computer Service
■ Ordered Quantity: 1
■ Ordered UOM: Month
■ Service Period: Year
■ Service Duration: 1
■ Serviceable Item: Laptop Computer

List price calculation for computer service:
■ Unit price method: 10 currency units per month * 12 months service period/duration = 120 currency 
■ Percent price method: (1000 currency unit laptop computer * 2% computer service percent price) * 
   12 months service period/duration = 240 currency units

More Postings to come.....
Thanks & Regards,
S.Grace Paul Regan