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Using FF&EZ's Pricing Tool

Posted by henrythe5th on January 2, 2014

As of version 3.2.85, 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 describes how this new utility is used and some of the things that you can accomplish with it.

specpricing.png

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, the Pricing Tool adds the following:

  • Ability to set prices with a markup or profit margin for all specifications or a scope (group) based on vendor, product type, etc.
  • Ability to "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.
  • Ability to enter a whole-project target price and have individual product prices adjusted proportionally to approximate that target.
  • Ability to override locked prices if needed.
  • Ability to lock (or unlock prices), either after setting new ones or as a separate procedure to protect all existing prices.
  • Ability to 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.

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.

The tool consists of four main parts:

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The Adjust Price option determines if prices will be changed and what markup to apply. This section also includes several options that further refine how the price is calculated and whether to override existing locked prices. It allows you to adjust prices with "psychological" or "charm" pricing, in which a price is rounded up to a whole number (or even 10, 100, etc.) and then adjusted slightly downward to make the price more attractive. The tool can do this in two different styles: ending in a 9 or a 5 (note that the actual adjustment changes depending on the size of the number itself, to avoid numbers like 29,999.99).

Note: As of version 3.2.120,  two new adjustment options were added: The first allows you to "bump" existing prices by a factor as an alternative to specifying a new markup (e.g., adjusting all prices up by 5% with a factor of 1.05). The second new feature allows you to set a target price for the entire project, with all prices adjusted to approximate that total amount.

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The Price Locking option allows you to lock or unlock the sell price of the specs you process. This option is applied independently (and after) any actual price changes and can be used without selecting "Adjust Price" to simply lock all existing prices when finalizing a project.

specpricing-scope.png

The General Scope selection uses several common ways to identify and process specifications as a group, such as vendor ID, a key word or phrase, a spec ID group (prefix), etc.

The Selected Scope on the right (see image above) shows which specifications have been selected to be processed.

To use the tool for basic pricing tasks, you would first confirm and enter all your vendor costs. Then, you simply access the Pricing Tool with the Utilities button on the Worksheet, Object or Specification screen, and :

  1. Indicate that you want to change the price of specifications by selecting the "Adjust price" option (the option is not selected by default to prevent accidental changes).
  2. Enter the markup or margin to use to calculate the prices.
  3. Decide whether the system will use "psychological pricing" to adjust the prices (either the existing prices or the new ones created by the "Adjust price" option) to make them more appealing.
  4. Indicate whether your changes will leave currently locked prices unchanged or apply to all specs in the scope you select (default: leave locked prices unchanged).
  5. Indicate whether you will change the current "Lock price" setting for affected specs or leave it "as is." We recommend that you not lock the prices you set until you are satisfied with them (you can run the tool again with the same settings and add "Lock price").
  6. Select a group (scope) of specifications to include with "General scope." Note that the items that appear are also affected by the "action" and options that were selected in the previous steps. Subsequent changes to those options may add  or subtract items as needed.
  7. Click on one of the two Process buttons.

The results will be displayed immediately, although if you process a group of specs that is not visible, you will need to close the tool to see those. You can run the tool as many times as you want to process more than one group or to see the effects of different markups on the project totals. Each time, the prices on affected specs are recalculated starting with the net cost (which does not change). If you have also entered all the quantities needed for your project's objects on the FF&E Worksheet, Room and Object screens, you can see the effects on the total project price.

Although beyond the scope of this post, you can use a methodical procedure of setting prices for different kinds of products (and then locking prices as you are satisfied with them) to build a more nuanced quote for your project. Typically, you do this by unlocking all of your prices, then pricing and locking any exceptions and special cases that need to be set manually (using the usual Edit function on the Specifications screen if needed), then pricing groups of items (or the rest of them) with the Pricing Tool and locking those until all prices are set.

Even if you set all your prices manually, or use a simple markup for all of your specifications, the Pricing Tool can still be very handy, because you can use it to ensure (in one operation) that all prices are locked after a client approves a quote or contract. You can also use it to simply set "psychological pricing" on prices that were set with a straight markup.

The Pricing Tool is available under the Utilities command on the Specifications, Object and FF&E Worksheet screens. At any time, you can use the FF&E Summary on the Worksheet to compare the overall pricing with a client's budget and your own profit margin targets, and you can of course print reports from the Worksheet and from the Object screens that show profit details and final quotes. 

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The" "Budgeting" mode gives you a multi-level view of budgets.

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"Cost/Sell" gives you feedback on  profit margins.

You can see more details about the Pricing Tool in the on-line Help system by searching for "Pricing Tool" or looking up the "Utilities" section for any of the three screens where the tool is available.

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