Last updated on July 18th, 2022
Smart business owners and executives know how crucial the right pricing is for their organization. Effective pricing defines the value of your products and services and shapes the company’s overall profitability.
In fact, according to a study by McKinsey published in the Harvard Business Review, just a 1% improvement in price increases operating profits by 11.1%.
That’s one of the reasons companies take advantage of personalized pricing for their customers. With personalized pricing, you consider your client’s needs and behaviors and offer a price you believe will make the sale and mutually benefit your client and your company.
The problem is that customizing prices for every client, product, service, or transaction is time-consuming. Your sales team needs to keep track of complex pricing rules and exceptions and manually enter discounts into each and every sales form.
Fortunately, users of QuickBooks Enterprise Solution can count on Advanced Pricing feature to customize pricing faster and easier than ever before.
What is Advanced Pricing?
Advanced Pricing is a subscription-based feature available to QuickBooks Enterprise Platinum and Diamond subscribers. Advanced Pricing allows organizations to create pricing rules. When those rules are met, QuickBooks Enterprise automatically adjusts the prices of items on sales forms.
If you’re familiar with QuickBooks Enterprise, you might ask, “Doesn’t QuickBooks Enterprise already allow custom price levels?” Yes. But Advanced Pricing goes beyond simply offering discounts for preferred customers.
Price Levels vs. Price Rules
Price levels have been available in QuickBooks Enterprise for quite some time. They allow users to change prices for certain customers, or groups of customers, automatically. For example, if you’ve agreed to offer a certain customer a 10% discount on all orders, you can use price levels to take 10% off of the standard item price whenever you invoice that customer.
Price rules let you get really detailed with your custom pricing by allowing you to set precise conditions for when QuickBooks changes an item price. For example, if you want your top ten customers (first condition) to receive a 10% discount, but only when they buy 30 or more (second condition) of a certain product (third condition), you can set up a pricing rule containing these three conditions.
You can create multiple rules with conditions based on customer, class, date range, item, quantity, and sales rep.
How to Enable Advanced Pricing
To take advantage of price rules, you need to make sure you’ve enabled Advanced Pricing in your QuickBooks Enterprise Platinum or Diamond subscription. First, make sure you’re using QuickBooks Desktop Enterprise version 18.0 or later – Advanced Pricing isn’t available for earlier versions.
- From the Edit menu, select Preferences.
- Click on Sales & Customers in the list on the left, then click on the Company Preferences
- In the Custom Pricing section, click on Enable Advanced Pricing.
- If you choose, you can tell QuickBooks how to handle price rounding at this point. For example, you can have QuickBooks round pricing to the nearest 10 cents to have the system change an order of $525.07 to $525.10.
- You can use the same rounding for all price rules by selecting Use the same rounding across all price rules, then choosing a rounding option from the drop-down menu.
- If you would rather set the rounding for each price rule separately, click Set rounding on each price rule. You’ll then have to select the rounding each time you create a new price rule.
- Click OK to save your selections. QuickBooks will alert you that it needs to close all open windows to change this preference.
How to Create a Price Rule
Now that you’ve enabled Advanced Pricing, it’s time to create your first price rule.
- Click on the Lists menu at the top of your window and select Price Rule List.
- Click the Price Rule button and select
- In the field for the Price Rule Name, enter a name for your price rule. You can also enter a description of the rule if you want.
Once you’ve created the rule, it’s time to create conditions for the rule.
- Click the + button in the conditions field to add a condition.
- In the first drop-down arrow, select whether your first condition applies to an Item, Customer, Class, or Sales Rep.
- In the second drop-down arrow, select your next condition. Your available options depend on the type of condition you’re creating. Complete the other drop-down fields to complete your condition and add additional requirements as needed.
- You can also set a date range to have the rule apply for a specific period, such as a seasonal promotion. In the From field, enter the date that the price rule goes into effect. You can also enter the date for the price rule to expire in the To field if the promotion is seasonal, or leave this field blank if the promotion lasts indefinitely.
- In the Price field, enter a percentage or amount to adjust the normal price of the product or service. Finish setting the price by selecting the appropriate options in the drop-down menus. You may also set any appropriate special options here.
- You can make a price rule exclusive by checking the Exclusive Rule Checking this box ensures that QuickBooks won’t combine this rule with any other rules, thus giving customers a larger discount than intended.
- You can also set custom prices for certain items by selecting the Price Overrides
- Click OK to finalize your selections.
Once you’ve created your rules, you can view all of the rules you’ve made in the Price Rule List. You can access this list from the Lists menu. From the list of price rules, you can also delete a rule or make certain rules inactive if you don’t want your sales team to be able to use them for a while but may wish to reactivate the rule in the future.
How to Create a Quantity Discount in Advanced Pricing
Another useful feature of Advanced Pricing is that it allows you to offer quantity discounts to all customers or select customers. For example, you can give customers a lower price when buying more than ten or more than 30 items. Establishing quantity discounts can help entice customers to order in bulk.
To create a quantity discount:
- From the Lists menu, select Item List.
- Create a new item or double-click on an existing item for which you want to offer a quantity discount.
- Click on the Qty Discount
- In the Quantity Discount window, enter the minimum number of items a customer must purchase in order to receive the discount in the Qty From For example, if you want to offer a discount for customers that order ten or more of a particular item, enter 10 in that field.
- In the Discount % column, enter the discount you want to offer. You can enter this as either a percentage or a fixed dollar amount. For example, if you’re going to provide a 5% discount, enter 5 in this field.
- You can repeat this process as many times as needed to offer additional quantity discounts for this item. For example, you can offer a 5% discount for ten or more items, a 10% discount for 20 or more items, and a 15% discount for 30 or more items.
- Select OK to finalize your selections.
A few things to keep in mind about using price rules within QuickBooks Enterprise:
First, if you’ve used price levels in the past, enabling price rules will convert all of your price levels into price rules. Also, if you have billing rates and price rules that apply to the same item, QuickBooks Enterprise applies the billing rate rather than the price rule.
Finally, QuickBooks Enterprise uses the total quantity on the line item to apply quantity discount rules. So if an item appears on more than one line of a sales form, the software will not combine the two lines and apply the price rule.
Keep this in mind if you have ten of Product A on line one, ten of Product A on line five and wonder why the system isn’t applying your quantity discount for customers who order 20 or more of Product A. You’ll need to enter the discount manually or combine the two lines for the system to apply the price rule.
Advanced Pricing also includes an original price column on your sales forms, so customers can see the discount they’re receiving.
With QuickBooks Enterprise and Advanced Pricing, your business can have a lot more flexibility in your pricing without a lot of extra work. It might take some time to set up your pricing rules, but once you do, your sales team will be able to offer discounts and promotions that entice customers to buy, without negatively impacting the bottom line. You simply set the price rules, and Advanced Pricing handles the calculations.
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