With the Summer ’24 release, Salesforce Revenue Lifecycle Management (RLM) introduced an innovative feature: Derived Pricing. This advanced functionality streamlines the pricing process, dynamically calculating product prices based on other products’ values or the total quote. If you’re familiar with Salesforce CPQ’s “Percent of Total” feature, Derived Pricing will feel familiar but offers even greater flexibility through advanced formulas and conditional rules.
Understanding Derived Pricing
Derived Pricing allows you to establish dynamic pricing rules, formulas, discount tiers, and dependencies during the initial product setup. These rules are applied automatically upon product selection, eliminating the need for manual calculations or price adjustments. The result is seamless, error-free, and consistent pricing.
Key Features of Derived Pricing
- Percentage-Based Pricing: Set a product’s price as a percentage of another product’s list price, net unit price, or subtotal.
- Flexible Formulas: Use advanced calculations, like Max, Min, and custom percentage rules, for a tailored pricing strategy.
- Transactional and Non-Transactional Scope: Choose to apply pricing rules to the current transaction or also include existing customer assets.
- Automatic Price Adjustments: Prices update automatically if the source product’s price changes, ensuring accuracy.
- Effortless Configuration: Define pricing rules during product setup, which auto-populate to minimize manual effort and maintain consistency.
Solution / How to Configure Derived Pricing
Derived Pricing in Salesforce RLM offers adaptable and intuitive options for defining complex pricing rules, formulas, and discount structures. Here’s how to configure this feature effectively:
Step-by-Step Setup Guide
Step 1: Configure Your Pricing Procedure
- Update the Pricing Procedure: Go to the Pricing Procedure settings and ensure the Is Derived variable is linked to the derived pricing attribute.
- Add Pricing Elements: Insert the “Derived Price” element into the pricing procedure, mapping the required input and output variables.
Step 2: Set Up the Derived Pricing Product
- Create the Product: Navigate to Product Catalog Management and create a new product, such as “Warranty for Model X.”
- Configure Pricing: Set the product’s list price to zero, as the derived price will be calculated. Check the Is Derived box to designate it as a derived pricing product.
Step 3: Define Derived Pricing Entries
- Create the Entry: Go to Derived Prices in the Product Catalog and add a new entry for your product.
- Set the Pricing Scope: Choose between transactional (for the current quote) or non-transactional (including existing customer assets), or both.
- Configure Pricing Rules: Define the pricing formula, such as setting the price to 10% of the net unit price with a minimum threshold of $2500.
Step 4: Sync and Test
- Sync Pricing Data: Search for “Pricing Setup” in Salesforce Setup and sync your pricing data to ensure the rules apply correctly.
- Test the Configuration: Add the product to a quote and verify that the derived pricing populates as expected.
Use Case
Derived Pricing is ideal for setting product or service prices based on other products or a set of related products. By defining various pricing rules upfront, calculations are applied automatically during transactions, reducing manual effort and errors.
Impact of Derived Pricing
- Accurate and Compliant Pricing: Ensures precision in pricing, meeting regulatory and business requirements effortlessly.
- Transparency in Pricing Details: Enhances the customer experience with clear, consistent, and reliable pricing across quotes.
Pricing Sources and Derived Pricing Scope
Pricing Sources
1.Product: Uses the price of one or more products within a transaction.
2.Header: Uses the total price of all products in the transaction cart.
Derived Pricing Scope
1.Transactional: Calculates the price of the derived product from a source product within the same or current transaction.
2.Both: A combination of both transactional and non-transactional scopes.
Prerequisites to Calculate Derived Price
1.Create a Source Product: Ensure that all products are added to a price book as price book entries with a base price.
2.Create a Derived Product
– Add the product as a price book entry.
– Select the Is Derived checkbox.
3.Set the List Price of the derived product as 0.
Note: The list price is set to 0 because there is no base price associated with the derived product. The Derived Price feature is used to calculate it.
Creating a Derived Price Record
To calculate a product’s derived price, define pricing rules and store the pricing data in the Derived Pricing Entries lookup table.
Example Scenario
“Calculate the derived price for a warranty on a mobile phone. If the net unit price of the mobile phone is $100 and the warranty cost is 10% of the mobile phone’s list price, the formula is:“-
“10% * List Price of the Mobile Phone = Derived Price of the Warranty“
Steps to Create a Derived Price Record
1.From the App Launcher, find and select Derived Prices.
2.Click New.
3.Specify these details:
– Derived Pricing Scope: Choose Transactional, Non-Transactional, or Both.
– Pricing Source: Select either Product or Header.
4.Search for and select a Price Book.
5.Search for and select a Derived Product.
6.Search for and select a Source Product (only required if the pricing source is Product).
7.Enter a Formula for the pricing rules.
8.You can set a formula for List Price, Net Unit Price, Subtotal, and Header parameters.
9.Set the Date Range.
10.Click Save.
Important: The derived and source products must belong to the same price book. If you select Header as your pricing source, you don’t need to specify a source product. The derived price can be calculated from the total cart value.
Creating a Pricing Procedure for Derived Price
Derived Price Variables
“To calculate derived prices, use the SalesTransactionContext and map variables to context tags.“
Input Variables Output Variables.
| Parameter Name | Mapped Context Tag | Description |
| Quantity | LineItemQuantity | Specify the quantity of the line items in the transaction. |
| Contributing Net Unit Price | ContributorUnitPrice | The unit price of the contributor. |
| Contributing Sub Total | ContributorTotalPrice | The total price of the contributor. |
| Contributor Source | ContributorSource | The pricing source. |
| Contributor Scope | ContributorScope | The pricing scope. |
| Transactional List Price | ListPrice | The list price for transactional scope. |
| Non-Transactional List Price | ListPrice | The list price for non-transactional scope. |
| Derived Formula | ContributorFormulaInput | The formula used to determine the pricing rule. |
| Contributing Id | Contributor | The ID of the contributor product or asset. |
| Header Total | TotalAmount | The total price of the cart. |
| Contributing Id | Contributor | The ID of the contributor product or asset. |
Output Variables Output Variables
| Parameter Name | Mapped Context Tag | Description |
| Net Unit Price | NetUnitPrice | The total price of the line item. |
| Subtotal | ItemNetTotalPrice | The subtotal price for the line item. |
Adding the Derived Price Element to a Pricing Procedure
Steps
1.Create a Pricing Procedure.
2.Define the Pricing Setting element.
– Map the Is Derived variable to the DerivedPricingAttribute context tag (stores a boolean value).
3.Use the List Price element to set prices for line items.
4.Click Add Element and select the Derived Price element.
5.Map variables to the relevant context tags, using the Derived Price Variables listed above.
Conclusion
Derived Pricing in Salesforce Revenue Lifecycle Management is a game-changing feature that streamlines and automates complex pricing scenarios with ease. By leveraging flexible formulas, dynamic rules, and both transactional and non-transactional scopes, businesses can ensure pricing consistency and accuracy across all quotes. This functionality not only enhances the efficiency of sales teams by reducing manual effort but also improves the customer experience by delivering transparent and reliable pricing. Implementing Derived Pricing allows your organization to handle intricate pricing requirements seamlessly, ensuring regulatory compliance and maximizing efficiency in revenue operations. Start leveraging Derived Pricing today to simplify your pricing processes and empower your sales teams with accurate and automatic pricing strategies