Pricing Products – Part 6 – Units and Unit Groups 2

Colin Maitland, 03 September 2012

In my first blog of this series, I wrote about the setup and use of Unit Groups and Units for Products using the example of a Unit Group called Widgets Unit Group containing Units of Each, Boxes, Pallets and Containers.

However, many types of businesses charge for services rather than products, such as Project Management, Business Analysis or Software Development etc.; or they charge for both services. Examples of people who charge for both services and products (or parts and labour) include Dentists, Electricians, Hairdressers, Mechanics and Plumbers etc.

In this blog I will be writing about the setup and use of Unit Groups and Units for services.

As an example, time measured services, such as Business Analysis, may be charged for in units of Hours, Days and Weeks and may be added to Opportunities, Quotes, Orders and Invoices in quantities of whole or partial Hours, Days and Weeks.

The following screenshot shows the creation of a new Unit Group called Time with a Primary Unit of an Hour.

There are two ways by which the related Units, Days and Weeks, may be defined. A Day could be defined as 8 Hours and a Week as either 5 Days or 40 Hours for example.

The following screenshot shows a Week defined as 5 Days:

The following screenshot shows a Week defined as 40 Hours:

Defining all Units in a Unit Group using the same Base Unit makes the sorting and comparison of each Unit, based on quantity easier because the Base Unit then does not need to be taken into account when comparing the Quantity.

The following screenshot shows an example of a service type product called Business Analysis. The default unit has been defined as a Day, rather than as an Hour, and the Product Type has been set to Services to denote, for reporting and analysis purposes, that this is a service rather than a product. The List Price has been defined as $1,500 per Day.

The decision to set the Default Unit to a Day rather than an Hour is a business decision that denotes that the Business Model in this example for quantifying and selling Business Analysis is by the Day rather than by the Hour.

The following screenshots shows a Price List called Consulting Services that contains Price List Items for a Day and a Week of Business Analysis.

The following screenshot shows a Price List Item for a Day of Business Analysis using 100% of the List Price as the pricing method.

The following screenshot shows a Price List Item for a Week of Business Analysis using 100% of the List Price as the pricing method.

The following screenshot shows two Product Lines that have been added to either an Opportunity, Quote, Order or Invoice. The first line is for one Day of Business Analysis and the second is for one Week of Business Analysis.

However, in some cases it is desirable to sell this example Business Analysis service by the Hour.

There are two methods by which this can be achieved. The first is to create a new Price List Item for an Hour of Business Analysis, as shown in the following screenshot, and add this price List Item to Opportunities, Quotes, Orders and Invoices as required.

The second is to add one of the Day or the Week related Price List Items to the Opportunity, Quote, Order or Invoice using a fractional Quantity such as 0.5 of a Day for 4 hours or 0.25 of a Day for two Hours. The screenshot below shows the addition of half a Day of Business Analysis to an Opportunity, Quote, Order or Invoice.

With the addition of a simple customisation of the Products grid, i.e. the addition of the Unit column, further clarity is achieved.

The following screenshot shows four hours of Business Analysis added in three different ways, i.e. as 4 Hours, 0.5 Day and as 0.1 Week. In each case the Extended Amount calculates to the same value.

In conclusion the use of Unit Groups, Units, Products, Price Lists and Price Lists Items in Microsoft Dynamics CRM provides a flexible model for defining and pricing Products and Services. The model can be configured to match your business model.