FF&EZ includes a Pricing Tool that can be used to mark up, adjust and protect the sell prices of groups of specifications in a project. When pricing FF&E for sales, some designers or salespersons may set prices using a specific markup for certain types of products. Other people may simply set prices automatically with a project-wide markup (also entered on the project screen) while others may only set prices manually for each specification, adjusting them for psychological "attractiveness." No matter what approach you use, you will find that the pricing tool can make the task of managing prices much easier, including setting "psychological pricing."
This post and video describes how this new utility is used and some of the things that you can accomplish with it.
Before we start, let's review how pricing works in FF&EZ:
- Each FF&EZ specification includes fields for the base (or "catalog") cost, adjustments such as a vendor discount, a markup percentage (or a gross margin percentage), the resulting markup amount and the sell price.
- A project-wide markup can be set up and overwritten on any specification.
- Changing any of the price-related fields causes FF&EZ to recalculate the related fields. So, if you change a field that is part of the net cost, the sell price is recalculated using the current markup. If you change the markup or markup amount, the sell price is again recalculated.
- If you change the sell price itself, the markup is recalculated and the sell price is locked against further automatic recalculations (you can still change it yourself at any time). When the cost is changed on a specification with a locked price, the markup is recalculated instead of the price.
To the basic capabilities described above, with the Pricing Tool you can also:
- Set prices with a markup or profit margin for all specifications or a scope (group) based on vendor, product type, query results, etc.
- "Bump" all existing prices by a multiplier (for instance, a regional or inflation factor) to quickly adjust the overall project price total in proportion to existing markups for different product types.
- Enter a whole-project target price and have individual product prices adjusted proportionally to approximate that target.
- Override locked prices if needed.
- Lock (or unlock prices), either after setting new ones or as a separate procedure to protect all existing prices.
- Automatically adjust all prices in the affected scope to create "psychological pricing" where $30.00 becomes $29.99 or $29.95 and $7,500.00 becomes $7,499.00 or $7,495.00, etc.
- Adjust the net cost with a vendor discount and either recalculate the markup or recalculate the price. You can also use this adjustment on purchasing management projects.
One of situations that this tool helps manage is where you are building a quote to a client who may only buy a portion of what you include (the "my brother-in-law is in the mattress business" problem). If you suspect that a certain class of products may be "shopped out," within a few moments you can easily reduce your profit margin in those and make it up elsewhere in items the client is more likely to buy from you. This preserves the overall target price you will present, while protecting more of your potential profit.