Default Outside Purchase Pricing

Configuration menu > Parts > Default Outside Purchase Pricing

The Default Outside Purchase Pricing Configuration setting determines pricing in R.O. Writer for all parts that have no inventory record in the Inventory module of R.O. Writer.

The window that opens when you select Default Outside Purchase Pricing depends on the option selected in the Outside Purchases section of the Set Pricing Method Configuration setting.

The Outside Purchases section circled on the Set Parts Pricing Method window.

The pricing methods for Outside Purchases are as follows:

If Use Cost Plus Multiplier (CPM) is selected, the Default Parts Pricing window opens displaying the settings for Cost Plus Multiplier (CPM).

If one of the matrix pricing options is selected, the Parts Price Matrix Wizard opens for that matrix type.

If one of the smart matrix options is selected, the Linear Pricing Progression Wizard opens for that matrix.

Cost Plus Multiplier (CPM) for Outside Purchases

If the Use Cost Plus Multiplier (CPM) pricing method is selected in the Outside Purchases section of the Set Pricing Method Configuration setting, the Default Parts Prices window opens when you click Configuration menu > Parts > Default Outside Purchase Pricing.

The Default Parts Prices window for cost plus multiplier.

There is only one CPM for all of R.O. Writer. The Default Parts Price window - no matter where you open it from - always displays the default values in the global CPM. You can access the default, global CPM by clicking Configuration menu > Parts > Price Levels > Default Pricing.

If you make changes here for outside purchases, those changes are saved to the one, global CPM and applied wherever CPM is used as the pricing method.

For full details about how to enter values on the Default Parts Pricing window, click the following link: Default Pricing.

Matrix Pricing by Supplier for Outside Purchases

If the Matrix Pricing by Supplier pricing method is selected in the Outside Purchases section of the Set Pricing Method Configuration setting, the Parts Price Matrix Wizard window opens when you click Configuration menu > Parts > Default Outside Purchase Pricing.

Setting up a matrix for the Matrix Pricing by Supplier method includes the following steps:

Step 1 - Name the New Matrix for Matrix Pricing by Supplier

To create a new matrix, click the New button and enter a name in the Matrix Name field.

The Matrix Name dropdown list.

Use a descriptive enough name so you can identify the correct matrix easily when editing.

For example, “CARQUEST Outside Purchase”.

TIP! You may want to click the Save Changes button to save the new name to the Matrix Name dropdown list.

Step 2 - Set the Price Ranges for Matrix Pricing by Supplier

Click the Price Ranges tab to set the cost ranges. Enter the dollar values in each box to set the cost ranges. The cost ranges are the pricing levels for the margins you set on the Margins tab.

When all the ranges have been entered, click the Next button to move to the next tab in the process or just click the tab you want to complete next.

the Price Ranges tab for matrix pricing by supplier.

The cost ranges are the pricing levels for margins you set on the Margins tab.

Step 3 - Select the Suppliers for Matrix Pricing by Supplier

On the Excluded Suppliers tab, use the arrow buttons to select the suppliers for the pricing matrix.

the Excluded Suppliers tab for matrix pricing by supplier.

NOTE: You can create a matrix for one supplier. This is useful if that supplier has their own pricing matrix.

Step 4 - Run the Sales History for Supplier Sales (Recommended)

If you have been using R.O. Writer for a while or you have sales history information in your database, historical sales information should be available. You can run a sales history analysis on the Sales History tab to see what the margins have been in the recent past. This will help you set the new pricing matrix margins on the Margins tab in the next step.

The Sales History tab is always blank when you first open it. The data appears only after the analysis has been run.

Complete these steps:

  1. By default, R.O. Writer selects the last 12 rolling months as the date range. You can select your own beginning and end date.
  2. Click the Run Analysis button and R.O. Writer runs an analysis of your actual purchases for the date range.
  3. The progress bar shows the progress of the analysis while it is running.
  4. The results appear in the table when the analysis is complete.

The analysis running on the Sales History tab for Matrix Pricing by Supplier.

The analysis is based on the

Click the Cancel button to clear the analysis on the Sales History tab. You can change the dates and click the Run Analysis button again.

NOTE: If historical data is not available, you can skip running the analysis and go right to the next step.

Step 5 - Set the Margins for Matrix Pricing by Supplier

On the Margins tab, you set the margins for the cost ranges entered on the Price Ranges tab.

the Margins tab for matrix pricing by supplier.

The following table describes the pricing rows.

Value

Description

Cost Range

The Cost Range set on the Price Ranges tab appear as columns on the Margins tab.

% of Total

This row displays the values from the Sales History if it was run. The percent of total parts sales for each price range appears. If the Sales History was not run, this area says “No Calc”.

CPM, Margin, and Markup

There are three categories for each cost range: CPM, Margin, and Markup. When you change one of these categories, R.O. Writer calculates the other two values. For instance, if you type in the CPM number, the Margin and Markup values change to match that number.

As a result,

  • You can better see the relationship between profit margin and markup.
  • You can enter the margin or markup and have R.O. Writer calculate the CPM.

Min Price

This is the minimum price for parts in this cost range. If the calculated price is less than the minimum price, then that price is used.

Aggregate Profit Margin

This number is a result of the Sales Analysis run in the previous step. Pay careful attention to this percentage because it provides powerful information regarding total parts sales profitability.

Step 6 - Enter the Global Settings for All Matrices

The global settings appear below the table.

The global settings in matrix pricing.

Global Parts Rounding Options

The Global Parts Rounding option selected applies to all matrices.

The Global Parts Rounding options and dropdown list.

Minimum Profit Margin

The minimum margin is the percentage of profit that no sale should fall below. A minimum margin must be set for Smart Matrix Pricing methods.

The minimum margin is a percentage even though a percent symbol (%) does not appear in the box or the field label.

To set the minimum profit margin, type the percentage into the box.

As a starting guideline, set the minimum about 1.5 to 2.0 percentage points lower than the aggregate profit margin. To see the aggregate profit margin percentage, run an analysis on the Sales Analysis tab.

NOTE: The minimum profit margin is a global setting and applies to all matrices.

R.O. Writer calculates the margin

Default CPM for Manual Price Calc

In the Default CPM for Manual Price Calc field, enter the multiplier used when the Price Calc button is clicked in the Pricing Section of the Editing Part Window.

To Save the Values on the Margins Tab

To save the margin values, you can do one of the following:

NOTE: Click Cancel to cancel your changes and also to close the entire window.

Step 7 - Save the Matrix for Matrix Pricing by Supplier

Click the Save Changes button in upper right corner.

The Margins tab of the Parts Price Matrix Wizard window with the Save Changes button circled.

All changes are saved and the matrix remains on the Parts Price Matrix Wizard.

You can click the Save Changes button

NOTE: You can also save the matrix by clicking the Save button on the Margins tab. However, this saves the matrix and closes the Parts Price Matrix Wizard.

Matrix Pricing by Department for Outside Purchases

If the Matrix Pricing by Department pricing method is selected in the Outside Purchases section of the Set Pricing Method Configuration setting, the Parts Price Matrix Wizard window opens when you click Configuration menu > Parts > Default Outside Purchase Pricing.

Setting up a matrix for the Matrix Pricing by Department method includes the following steps:

Step 1 - Name the New Matrix for Matrix Pricing by Department

To create a new matrix, click the New button and enter a name in the Matrix Name field.

The Matrix Name dropdown list.

Use a descriptive enough name so you can identify the correct matrix easily when editing.

For example, “Brakes Outside Purchase”.

TIP! You may want to click the Save Changes button to save the new name to the Matrix Name dropdown list.

Step 2 - Set the Cost Ranges for Matrix Pricing by Department

Click the Price Ranges tab to set the cost ranges. Enter the dollar values in each box to set the cost ranges. The cost ranges are the pricing levels for the margins you set on the Margins tab.

When all the ranges have been entered, click the Next button to move to the next tab in the process or just click the tab you want to complete next.

The Price Ranges tab for Matrix Pricing by Department.

The cost ranges are the pricing levels for margins you set on the Margins tab.

Step 3 - Select the Departments for Matrix Pricing by Department

On the Departments tab, use the arrow buttons to select the parts departments for the pricing matrix.

If certain parts departments have different pricing, decide what those departments are and create separate matrices for those departments.

The Departments tab for Matrix Pricing by Department

You can create an entire matrix for one department.

Step 4 - Run a Sales Analysis for Matrix Pricing by Department (Recommended)

If you have been using R.O. Writer for a while or you have sales history information in your database, historical sales information should be available. You can run a sales history analysis on the Sales History tab to see what the margins have been in the recent past. This will help you set the new pricing matrix margins on the Margins tab in the next step.

The Sales History tab is always blank when you first open it. The data appears only after the analysis has been run.

Complete these steps:

  1. By default, R.O. Writer selects the last 12 rolling months as the date range. You can select your own beginning and end date.
  2. Click the Run Analysis button and R.O. Writer runs an analysis of your actual purchases for the date range.
  3. The progress bar shows the progress of the analysis while it is running.
  4. The results appear in the table when the analysis is complete.

The Sales History tab for Matrix Pricing by Department

The analysis is based on the

Click the Cancel button to clear the analysis on the Sales History tab. You can change the dates and click the Run Analysis button again.

NOTE: If historical data is not available, you can skip running the analysis and go right to the next step.

Step 5 - Set the Margins for Matrix Pricing by Department

On the Margins tab, you set the margins for the cost ranges entered on the Price Ranges tab.

The Margins tab for Matrix Pricing by Department.

The following table describes the pricing rows.

Value

Description

Cost Range

The Cost Range set on the Price Ranges tab appear as columns on the Margins tab.

% of Total

This row displays the values from the Sales History if it was run. The percent of total parts sales for each price range appears. If the Sales History was not run, this area says “No Calc”.

CPM, Margin, and Markup

There are three categories for each cost range: CPM, Margin, and Markup. When you change one of these categories, R.O. Writer calculates the other two values. For instance, if you type in the CPM number, the Margin and Markup values change to match that number.

As a result,

  • You can better see the relationship between profit margin and markup.
  • You can enter the margin or markup and have R.O. Writer calculate the CPM.

Min Price

This is the minimum price for parts in this cost range. If the calculated price is less than the minimum price, then that price is used.

Aggregate Profit Margin

This number is a result of the Sales Analysis run in the previous step. Pay careful attention to this percentage because it provides powerful information regarding total parts sales profitability.

Step 6 - Enter the Global Settings for All Matrices

The global settings appear below the table.

The global settings in matrix pricing.

Global Parts Rounding Options

The Global Parts Rounding option selected applies to all matrices.

The Global Parts Rounding options and dropdown list.

Minimum Profit Margin

The minimum margin is the percentage of profit that no sale should fall below. A minimum margin must be set for Smart Matrix Pricing methods.

The minimum margin is a percentage even though a percent symbol (%) does not appear in the box or the field label.

To set the minimum profit margin, type the percentage into the box.

As a starting guideline, set the minimum about 1.5 to 2.0 percentage points lower than the aggregate profit margin. To see the aggregate profit margin percentage, run an analysis on the Sales Analysis tab.

NOTE: The minimum profit margin is a global setting and applies to all matrices.

R.O. Writer calculates the margin

Default CPM for Manual Price Calc

In the Default CPM for Manual Price Calc field, enter the multiplier used when the Price Calc button is clicked in the Pricing Section of the Editing Part Window.

To Save the Values on the Margins Tab

To save the margin values, you can do one of the following:

NOTE: Click Cancel to cancel your changes and also to close the entire window.

Step 7 - Save the Matrix for Matrix Pricing by Department

Click the Save Changes button in upper right corner.

The Margins tab of the Parts Price Matrix Wizard window with the Save Changes button circled.

All changes are saved and the matrix remains on the Parts Price Matrix Wizard.

You can click the Save Changes button

NOTE: You can also save the matrix by clicking the Save button on the Margins tab. However, this saves the matrix and closes the Parts Price Matrix Wizard.

Matrix Pricing by Associated Labor for Outside Purchases

If the Matrix Pricing by Associated Labor pricing method is selected in the Outside Purchases section of the Set Pricing Method Configuration setting, the Parts Price Matrix Wizard window opens when you click Configuration menu > Parts > Default Outside Purchase Pricing.

Setting up a matrix for the Matrix Pricing by Associated Labor method includes the following steps:

Step 1 - Name the Matrix for Matrix Pricing by Associated Labor

To create a new matrix, click the New button and enter a name in the Matrix Name field.

The Matrix Name dropdown list.

Use a descriptive enough name so you can identify the correct matrix easily when editing.

For example, “Transmission Labor Outside Purchases”.

TIP! You may want to click the Save Changes button to save the new name to the Matrix Name dropdown list.

Step 2 - Set the Cost Ranges for Matrix Pricing by Associated Labor

Click the Price Ranges tab to set the cost ranges. Enter the dollar values in each box to set the cost ranges. The cost ranges are the pricing levels for the margins you set on the Margins tab.

When all the ranges have been entered, click the Next button to move to the next tab in the process or just click the tab you want to complete next.

If there are certain types of labor that need to have different pricing, decide which categories and/or operations are priced differently and create separate matrices for those labor categories and/or operations.

The Price Ranges tab for Matrix Pricing by Associated Labor

Step 3 - Select the Labor Categories for Matrix Pricing by Associated Labor

On the Labor Categories tab, use the arrow buttons to select the categories for the pricing matrix.

The labor categories tab for Matrix Pricing by Associated Labor.

You can create an entire matrix for just one labor category.

Selecting categories does not limit the labor operations that appear on the Operations tab. By default, all operations appear on the Operations tab regardless of the categories selected on the Labor Categories tab.

Step 4 - Select the Labor Operations for Matrix Pricing by Associated Labor

On the Labor Operations tab, use the arrow buttons to select the suppliers for the pricing matrix.

Selecting categories does not limit the labor operations that appear on the Operations tab. By default, all operations appear on the Operations tab regardless of the categories selected on the Labor Categories tab.

You can select labor operations from multiple categories or just one labor operation for the entire matrix.

The operations tab for Matrix Pricing by Associated Labor.

Step 5 - Set the Margins for Matrix Pricing by Associated Labor

On the Margins tab, you set the margins for the cost ranges entered on the Price Ranges tab.

The margins tab for Matrix Pricing by Associated Labor.

The following table describes the pricing rows.

Value

Description

Cost Range

The Cost Range set on the Price Ranges tab appear as columns on the Margins tab.

% of Total

This row displays the values from the Sales History if it was run. The percent of total parts sales for each price range appears. If the Sales History was not run, this area says “No Calc”.

CPM, Margin, and Markup

There are three categories for each cost range: CPM, Margin, and Markup. When you change one of these categories, R.O. Writer calculates the other two values. For instance, if you type in the CPM number, the Margin and Markup values change to match that number.

As a result,

  • You can better see the relationship between profit margin and markup.
  • You can enter the margin or markup and have R.O. Writer calculate the CPM.

Min Price

This is the minimum price for parts in this cost range. If the calculated price is less than the minimum price, then that price is used.

Aggregate Profit Margin

This number is a result of the Sales Analysis run in the previous step. Pay careful attention to this percentage because it provides powerful information regarding total parts sales profitability.

Step 6 - Enter the Global Settings for All Matrices

The global settings appear below the table.

The global settings in matrix pricing.

Global Parts Rounding Options

The Global Parts Rounding option selected applies to all matrices.

The Global Parts Rounding options and dropdown list.

Minimum Profit Margin

The minimum margin is the percentage of profit that no sale should fall below. A minimum margin must be set for Smart Matrix Pricing methods.

The minimum margin is a percentage even though a percent symbol (%) does not appear in the box or the field label.

To set the minimum profit margin, type the percentage into the box.

As a starting guideline, set the minimum about 1.5 to 2.0 percentage points lower than the aggregate profit margin. To see the aggregate profit margin percentage, run an analysis on the Sales Analysis tab.

NOTE: The minimum profit margin is a global setting and applies to all matrices.

R.O. Writer calculates the margin

Default CPM for Manual Price Calc

In the Default CPM for Manual Price Calc field, enter the multiplier used when the Price Calc button is clicked in the Pricing Section of the Editing Part Window.

To Save the Values on the Margins Tab

To save the margin values, you can do one of the following:

NOTE: Click Cancel to cancel your changes and also to close the entire window.

Step 7 - Set the Supplier Adjustment for Matrix Pricing by Associated Labor

On the Supplier Adjustment tab, you can adjust the final calculated price per supplier.

The supplier adjustment tab for Matrix Pricing by Associated Labor.

Step 8 - Save the Matrix for Matrix Pricing by Associated Labor

Click the Save Changes button in upper right corner.

The Margins tab of the Parts Price Matrix Wizard window with the Save Changes button circled.

All changes are saved and the matrix remains on the Parts Price Matrix Wizard.

You can click the Save Changes button

NOTE: You can also save the matrix by clicking the Save button on the Margins tab. However, this saves the matrix and closes the Parts Price Matrix Wizard.

Smart Matrix Pricing by Supplier for Outside Purchases

If the Smart Matrix Pricing by Supplier pricing method is selected in the Outside Purchases section of the Set Pricing Method setting, the Smart Matrix Pricing Wizard opens when you click Configuration menu > Parts > Default Outside Purchase Pricing. The settings for Smart Matrix Pricing by Supplier appear on the pricing wizard window automatically.

Setting up a matrix for the Smart Matrix Pricing by Supplier method includes the following steps:

Step 1 - Name the New Matrix for Smart Matrix Pricing by Supplier

To create a new matrix, click the New button and enter a name in the Matrix Name field.

The smart Matrix Name dropdown list.

Use a descriptive enough name so you can identify the correct matrix easily when editing.

For example, “Oil Supplier Outside Purchases”.

TIP! You may want to click the Save Changes button to save the new name to the Matrix Name dropdown list.

Step 2 - Establish the Pricing Matrix for Smart Matrix Pricing by Supplier

The pricing matrix is established on the Settings tab. There are a few sub-steps.

Step 2a - Set the Cost Points

The cost points are the cost levels you will set the margins for in the next step. There are six cost points available to set.

Enter the dollar values in each box to set that cost point.

In Smart Matrix Pricing, the levels are infinite. It is a gradual stair step where halfway is 50%. This is usually a progression downwards, but it doesn't have to be.

The Settings tab for Smart Matrix Pricing by Supplier.

Step 2b - Set the Margins for Each Cost Point

There are three categories for each cost range: CPM, Margin, and Markup. You only need to enter one of these values.

When you change one of these categories, R.O. Writer calculates the other two values. For instance, if you type in the CPM number, the Margin and Markup values change to match that number.

As a result,

In addition, when you enter a CPM, Margin, or Markup value, a preview of the linear progression appears in the CPM chart at the top of the window. The moving image below shows a sample of

Changing the CPM and seeing the preview in the CPM chart.

Step 2c - Set the Minimum Price for Each Cost Point

Set a minimum price for each cost point. If the calculated price is less than the minimum price, then that price is used.

Step 3 - Enter the Global Settings for All Matrices

The global settings for all matrices appear below the Settings table.

The global settings in smart matrix pricing.

Global Parts Rounding Options

The Global Parts Rounding option selected applies to all matrices.

The Global Parts Rounding options and dropdown list.

Minimum Profit Margin

The minimum margin is the percentage of profit that no sale should fall below. A minimum margin must be set for Smart Matrix Pricing methods.

The minimum margin is a percentage even though a percent symbol (%) does not appear in the box or the field label.

To set the minimum profit margin, type the percentage into the box.

As a starting guideline, set the minimum about 1.5 to 2.0 percentage points lower than the aggregate profit margin. To see the aggregate profit margin percentage, run an analysis on the Sales Analysis tab.

NOTE: The minimum profit margin is a global setting and applies to all matrices.

R.O. Writer calculates the margin

Default CPM for Manual Price Calc

In the Default CPM for Manual Price Calc field, enter the multiplier used when the Price Calc button is clicked in the Pricing Section of the Editing Part Window.

Step 4 - Calculate the Price from a Sample Cost (Recommended)

After the matrix is set and saved, you can check to see if your settings for the matrix are what you want.

Type in the cost of a part into the Sample Cost box. Then, click the Calculate button to see what the price would be for that cost using the currently saved matrix.

The Sample Cost field with a value entered.

A popup window appears showing you the Sell For price (with and without rounding) and exactly how that price was calculated.

The pop up window showing the calculated price.

Step 5 - Run a Sales Analysis for Smart Matrix Pricing by Supplier (Recommended)

If you have been using R.O. Writer for a while or you have sales history information in your database, historical sales information should be available. You can run a sales history analysis on the Sales History tab to see what the margins have been in the recent past. This will help you set the new pricing matrix margins on the Margins tab in the next step.

The Sales History tab is always blank when you first open it. The data appears only after the analysis has been run.

Complete these steps:

  1. By default, R.O. Writer selects the last 12 rolling months as the date range. You can select your own beginning and end date.
  2. Click the Run Analysis button and R.O. Writer runs an analysis of your actual purchases for the date range.
  3. The progress bar shows the progress of the analysis while it is running.
  4. The results appear in the table when the analysis is complete.

The Sales Analysis tab for Smart Matrix Pricing by Supplier

The Cost Ranges in the table are the Cost Points entered on the Settings tab.

Pay attention to the Aggregate Profit Margin; it provides powerful information about the profitability to total parts sales.

NOTE: If historical data is not available, you can skip running the analysis and go right to the next step.

Step 6 - Select the Suppliers for Smart Matrix Pricing by Supplier

On the Suppliers tab, use the arrow buttons to select the suppliers for the pricing matrix.

The Suppliers tab for Smart Matrix Pricing by Supplier

Step 7 - Save the Smart Matrix for Smart Matrix Pricing by Supplier

Click the Save Changes button in the upper right corner of the Smart Matrix Pricing Wizard window at any time to save the matrix. The settings are saved and the matrix remains on the window.

Smart Matrix by Department for Outside Purchases

If the Smart Matrix by Department pricing method is selected in the Outside Purchases section of the Set Pricing Method Configuration setting, the Linear Pricing Progression Wizard opens when you click Configuration menu > Parts > Default Outside Purchase Pricing. The settings for Smart Matrix Pricing by Department appear on the pricing wizard window automatically.

Setting up a matrix for the Smart Matrix Pricing by Department method includes the following steps:

Step 1 - Name the New Matrix for Smart Matrix Pricing by Department

To create a new matrix, click the New button and enter a name in the Matrix Name field.

The smart Matrix Name dropdown list.

Use a descriptive enough name so you can identify the correct matrix easily when editing.

For example, “Oil Department Outside Purchases”.

TIP! You may want to click the Save Changes button to save the new name to the Matrix Name dropdown list.

Step 2 - Establish the Pricing Matrix for Smart Matrix Pricing by Department

The pricing matrix is established on the Settings tab. There are a few sub-steps.

Step 2a - Set the Cost Points

The cost points are the cost levels you will set the margins for in the next step. There are six cost points available to set.

Enter the dollar values in each box to set that cost point.

In Smart Matrix Pricing, the levels are infinite. It is a gradual stair step where halfway is 50%. This is usually a progression downwards, but it doesn't have to be.

The Settings tab for Smart Matrix Pricing by Department

Step 2b - Set the Margins for Each Cost Point

There are three categories for each cost range: CPM, Margin, and Markup. You only need to enter one of these values.

When you change one of these categories, R.O. Writer calculates the other two values. For instance, if you type in the CPM number, the Margin and Markup values change to match that number.

As a result,

In addition, when you enter a CPM, Margin, or Markup value, a preview of the linear progression appears in the CPM chart at the top of the window. The moving image below shows a sample of

Changing the CPM and seeing the preview in the CPM chart.

Step 2b - Set the Minimum Price for the Cost Point

Set a minimum price for each cost point. If the calculated price is less than the minimum price, then that price is used.

As part of the Smart Matrix pricing, there is a minimum price that can be set for each cost range. If the calculated price is less than the minimum price, then that price is used.

Step 3 - Enter the Global Settings for All Matrices

The global settings for all matrices appear below the Settings table.

The global settings in smart matrix pricing.

Global Parts Rounding Options

The Global Parts Rounding option selected applies to all matrices.

The Global Parts Rounding options and dropdown list.

Minimum Profit Margin

The minimum margin is the percentage of profit that no sale should fall below. A minimum margin must be set for Smart Matrix Pricing methods.

The minimum margin is a percentage even though a percent symbol (%) does not appear in the box or the field label.

To set the minimum profit margin, type the percentage into the box.

As a starting guideline, set the minimum about 1.5 to 2.0 percentage points lower than the aggregate profit margin. To see the aggregate profit margin percentage, run an analysis on the Sales Analysis tab.

NOTE: The minimum profit margin is a global setting and applies to all matrices.

R.O. Writer calculates the margin

Default CPM for Manual Price Calc

In the Default CPM for Manual Price Calc field, enter the multiplier used when the Price Calc button is clicked in the Pricing Section of the Editing Part Window.

Step 4 - Calculate the Price from a Sample Cost (Recommended)

After the matrix is set and saved, you can check to see if your settings for the matrix are what you want.

Type in the cost of a part into the Sample Cost box. Then, click the Calculate button to see what the price would be for that cost using the currently saved matrix.

The Sample Cost field with a value entered.

A popup window appears showing you the Sell For price (with and without rounding) and exactly how that price was calculated.

The pop up window showing the calculated price.

Step 5 - Run a Sales Analysis for Smart Matrix Pricing by Department (Recommended)

If you have been using R.O. Writer for a while or you have sales history information in your database, historical sales information should be available. You can run a sales history analysis on the Sales History tab to see what the margins have been in the recent past. This will help you set the new pricing matrix margins on the Margins tab in the next step.

The Sales History tab is always blank when you first open it. The data appears only after the analysis has been run.

Complete these steps:

  1. By default, R.O. Writer selects the last 12 rolling months as the date range. You can select your own beginning and end date.
  2. Click the Run Analysis button and R.O. Writer runs an analysis of your actual purchases for the date range.
  3. The progress bar shows the progress of the analysis while it is running.
  4. The results appear in the table when the analysis is complete.

The Sales Analysis tab for Smart Matrix Pricing by Department

The Cost Ranges in the table are the Cost Points entered on the Settings tab.

Pay attention to the Aggregate Profit Margin; it provides powerful information about the profitability to total parts sales.

NOTE: If historical data is not available, you can skip running the analysis and go right to the next step.

Step 6 - Select the Departments for Smart Matrix Pricing by Department

On the Departments tab, use the arrow buttons to select the parts departments for the pricing matrix.

If certain parts departments have different pricing, decide what those departments are and create separate matrices for those departments.

The Departments tab for Smart Matrix Pricing by Department

You can create an entire matrix for one department.

Step 6 - Save the Smart Matrix for Smart Matrix Pricing by Department

Click the Save Changes button in the upper right corner of the Smart Matrix Pricing Wizard window at any time to save the matrix. The settings are saved and the matrix remains on the window.

Smart Matrix Pricing by Associated Labor for Outside Purchases

If the Smart Matrix Pricing by Associated Labor pricing method is selected in the Outside Purchases section of the Set Pricing Method Configuration setting, the Smart Matrix Pricing Wizard opens when you click Configuration menu > Parts > Default Outside Purchase Pricing. The settings for Smart Matrix Pricing by Associated Labor appear on the pricing wizard window automatically.

Setting up a matrix for the Smart Matrix Pricing by Associated Labor method includes the following steps:

Step 1 - Name the New Matrix for Smart Matrix Pricing by Associated Labor

To create a new matrix, click the New button and enter a name in the Matrix Name field.

The smart Matrix Name dropdown list.

Use a descriptive enough name so you can identify the correct matrix easily when editing.

For example, “Oil Labor Outside Purchases”.

TIP! You may want to click the Save Changes button to save the new name to the Matrix Name dropdown list.

Step 2 - Establish the Pricing Matrix for Smart Matrix Pricing by Associated Labor

The pricing matrix is established on the Settings tab. There are a few sub-steps.

Step 2a - Set the Cost Points

The cost points are the cost levels you will set the margins for in the next step. There are six cost points available to set.

Enter the dollar values in each box to set that cost point.

In Smart Matrix Pricing, the levels are infinite. It is a gradual stair step where halfway is 50%. This is usually a progression downwards, but it doesn't have to be.

The Settings tab for Smart Matrix Pricing by Associated Labor

Step 2b - Set the Margins for Each Cost Point

There are three categories for each cost range: CPM, Margin, and Markup. You only need to enter one of these values.

When you change one of these categories, R.O. Writer calculates the other two values. For instance, if you type in the CPM number, the Margin and Markup values change to match that number.

As a result,

In addition, when you enter a CPM, Margin, or Markup value, a preview of the linear progression appears in the CPM chart at the top of the window. The moving image below shows a sample of

Changing the CPM and seeing the preview in the CPM chart.

Step 2c - Set the Minimum Price for Each Cost Point

Set a minimum price for each cost point. If the calculated price is less than the minimum price, then that price is used.

Step 3 - Enter the Global Settings for All Matrices

The global settings for all matrices appear below the Settings table.

The global settings in smart matrix pricing.

Global Parts Rounding Options

The Global Parts Rounding option selected applies to all matrices.

The Global Parts Rounding options and dropdown list.

Minimum Profit Margin

The minimum margin is the percentage of profit that no sale should fall below. A minimum margin must be set for Smart Matrix Pricing methods.

The minimum margin is a percentage even though a percent symbol (%) does not appear in the box or the field label.

To set the minimum profit margin, type the percentage into the box.

As a starting guideline, set the minimum about 1.5 to 2.0 percentage points lower than the aggregate profit margin. To see the aggregate profit margin percentage, run an analysis on the Sales Analysis tab.

NOTE: The minimum profit margin is a global setting and applies to all matrices.

R.O. Writer calculates the margin

Default CPM for Manual Price Calc

In the Default CPM for Manual Price Calc field, enter the multiplier used when the Price Calc button is clicked in the Pricing Section of the Editing Part Window.

Step 4 - Calculate the Price Based on Sample Cost (Recommended)

After the matrix is set and saved, you can check to see if your settings for the matrix are what you want.

Type in the cost of a part into the Sample Cost box. Then, click the Calculate button to see what the price would be for that cost using the currently saved matrix.

The Sample Cost field with a value entered.

A popup window appears showing you the Sell For price (with and without rounding) and exactly how that price was calculated.

The pop up window showing the calculated price.

Step 5 - Select the Labor Categories for Smart Matrix Pricing by Associated Labor

On the Labor Categories tab, use the arrow buttons to select the categories for the smart matrix.

The Labor Categories tab for Smart Matrix Pricing by Associated Labor

You can create an entire matrix for just one labor category.

Selecting categories does not limit the labor operations that appear on the Labor Operations tab. By default, all operations appear on the Labor Operations tab regardless of the categories selected on the Labor Categories tab.

Step 6 - Select the Labor Operations for Smart Matrix Pricing by Associated Labor

On the Labor Operations tab, use the arrow buttons to select the suppliers for the pricing matrix.

Selecting categories does not limit the labor operations that appear on the Operations tab. By default, all operations appear on the Operations tab regardless of the categories selected on the Labor Categories tab.

You can select labor operations from multiple categories or just one labor operation for the entire matrix.

The Labor Operations tab for Smart Matrix Pricing by Associated Labor

Step 7 - Set the Supplier Adjustment for Smart Matrix Pricing by Associated Labor (Optional)

On the Supplier Adjustment tab, you can adjust the final calculated price per supplier.

The Supplier Adjustment tab for Smart Matrix Pricing by Associated Labor

Step 8 - Save the Smart Matrix for Smart Matrix Pricing by Associated Labor

Click the Save Changes button in the upper right corner of the Smart Matrix Pricing Wizard window at any time to save the matrix. The settings are saved and the matrix remains on the window.