In this post, we’ll explore the Derived Pricing feature within Salesforce Revenue Lifecycle Management (RLM), introduced in the Summer ’24 release.
Derived Pricing allows you to dynamically calculate the price of a product based on another product or the overall quote total.
This functionality is similar to the “Percent of Total” products in Salesforce CPQ but offers enhanced flexibility with additional formulas and conditions.
What is Derived Pricing?
Derived Pricing in RLM enables you to set the price of a product (the derived product) based on the price or quantity of another product (the source product) or the overall quote.
It allows you to calculate prices using percentages and apply functions like Max, Min, and custom formulas. This can be particularly useful for pricing products like warranties, maintenance services, or any additional features tied to the primary product’s value.
Key Features of Derived Pricing
- Percentage-Based Pricing: Calculate the price of a product as a percentage of the source product’s list price, net unit price, or subtotal.
- Flexible Formulas: Use formulas to apply Max, Min, or specific percentages to determine the derived price.
- Transactional and Non-Transactional Scope: Configure derived pricing to consider only the current transaction or include existing assets on the customer’s account.
- Automatic Price Adjustments: Automatically adjust derived prices when the source product’s price changes, ensuring accurate and consistent pricing.
Example: Setting Up Derived Pricing in Salesforce RLM
Let’s walk through an example where we set up a warranty product using Derived Pricing. In this case, the warranty price will be 10% of the total product price, with a minimum price threshold.
Step 1: Configure the Pricing Procedure
Before setting up derived pricing, ensure your pricing procedure includes the derived price element. Here’s what you need to do:
- Update Pricing Procedure: Go to the Pricing Procedure settings and ensure the “Is Derived” variable is mapped to the derived pricing attribute.
- Add Pricing Element: Add the “Derived Price” pricing element to your procedure and map the input and output variables accordingly.
Step 2: Create the Derived Pricing Product
Next, create the product that will use derived pricing:
- Create a Product: Navigate to the Product Catalog Management app, and create a new product (e.g., “Warranty for Model X”).
- Set Up Pricing: Ensure that the list price is set to zero, as the derived price will calculate based on other factors. Mark the product as a derived pricing product by checking the “Is Derived” checkbox.
Step 3: Define the Derived Pricing Entry
To link the derived product to its source:
- Create a Derived Pricing Entry: In the Product Catalog, navigate to “Derived Prices” and create a new entry for the warranty product.
- Configure the Pricing Scope: Choose whether the pricing should be transactional, non-transactional, or both. For transactional, the price is calculated based on the current quote.
- Set Pricing Formula: Use the net unit price or other available fields to calculate the percentage. For instance, set the derived price as 10% of the net unit price with a minimum of $2500.
Step 4: Sync Pricing Data
Finally, sync the pricing data to ensure your changes are applied:
- Sync Pricing Data: Navigate to the Salesforce Setup, search for “Pricing Setup,” and sync your pricing data.
- Test the Configuration: Add the product to a quote and verify that the derived pricing calculates correctly.
Conclusion
Derived Pricing in Salesforce RLM is a powerful feature that can significantly streamline your pricing processes by automatically adjusting prices based on other product values or the overall quote. Whether you’re dealing with warranties, maintenance plans, or other supplementary products, Derived Pricing ensures consistency and accuracy across your quotes.
For a more detailed walkthrough and a live demonstration, check out our YouTube video. Stay tuned for more insights into Salesforce RLM and other powerful Salesforce features!