Purpose of the contracts
Prima’s Contract module is a fundamental customer pricing function that effectively is the basis for a client’s pricing set up. In the B2B supplies market, contract pricing defines the pricing on core lines that a client will typically order in larger quantities, with a higher frequency. We are however seeing a definite shift in the way contracts are being managed, leading to an increasing stream of enhancement requests.
It is a heavily used feature of Prima Cloud, along with the PrimaGO store and in this short piece, I will summarise the capabilities of Contract pricing in the system.
How Contracts work in Prima
A contract in Prima is essentially a list of products assigned to a customer account(or group of accounts via the Parent-Child setup), which can be a mix of Standard(nett) priced and/or Markup/Margin(Prima tracks the cost price to generate the sell price based on set %) priced products depending on the contract requirements. With the exception of Featured Price products for promotions, a contract price will be the price the customer pays for the product i.e. contract price wins.
Getting the products into the contracts
There are several ways to populate customer contracts.
Firstly you can open the contract directly from the company module and enter the products manually, choosing Standard or Markup/Margin price by line. We’ve recently added the History button to this screen so that users have a clear insight when adding contract lines as to what has been purchased so far by the customer, user can then quickly add the line(s) to the contract.
Sales orders and quotes are a really popular way to add and update contract lines. The user can prepare the contract via the quote with all the extra info around supplier pricing, alternatives, grouped products etc and then simply add the lines en masse using Standard and/or Markup/Margin pricing. It’s a great feature and makes the management of the contract much more efficient.
For new contracts you then have the import template in which you populate the customer, product and pricing info and simply drop it in the imports directory (same place where you import catalogues) and it applies to the customer account immediately.
Revisions
When the time comes to analyse your customer spend, Prima has various methods in which you can review your contracts.
From within the customer contract itself there is lots of information, much of it based on Last Major Revision Date(i.e. the last time you applied a Revision to the contract), to show the user spend, usage and margin data in order to make a decision on updating the price or perhaps removing lines with no spend completely.
You can simply look at the product lines and make a decision there and then to update them individually.
Revision modes in Prima allow for a more thorough evaluation of the customer contract. The Major Revision essentially allows the user to work on the new contract price list in preparation for a new contract period, whilst the existing contract remains live for the customer. In Major Revision mode the user can set the Next Revision date, add or remove lines, change pricing types, update prices, delete all lines and more. The user also has the ability to work on the revision outside of Prima by exporting the contract revision. Prices can then be managed in Excel and re-imported back to the revision.
Only when you Apply Major Revision does the new contract become live for the customer. At this point your usage, frequency and average margin data etc. starts again and will run until the next time you review the contract.
Apply Mini Revision essentially resets the selling prices back to the margin you were making on the products at the last time you reviewed the contract. It’s a quick option just be wary of resetting the frequencies in this case.
Grid Manager facilities
In a recent service pack, we added some significant updates to the Contract Grid Manager to allow users to make bulk changes to contracts, such as replacement products or removing products from multiple contracts at once. We will certainly see the functionality evolve in this module over coming months as we see these global change facilities greatly improve efficiency. We strongly advise not to use the Grid Managers in Prima without any training because you are changing potentially many records at once. Here is a recent webinar on the Contract Grid Manager.
Common issues mistakes we see with contracts
On a very basic level, one of things we see regularly is the sales admin team using the contract option within an order, just so the customer receives the same price each time, regardless of cost price increases or the frequency in which they order. This obviously has potential issues with regards to margin erosion and also litters the contract with products that may only be ordered sporadically.
If you are using Markup/Margin based contract products, it’s imperative that you have correct cost prices in Prima for the right sell price to be generated.
Understanding when a contract is in Revision mode is really important, as any changes made to the contract during this period will be applied to the revision and not the live contract. If the contract is in Revision mode it will say Open Revision at the top of the customer contract. To cancel the revision click on the Open Revision button then click Cancel Revision.
In summary, the contracts module is a very powerful tool and we really advise looking at the help content available or contacting our team to arrange a training package if you wish to learn more.
