Tariff changes can raise your costs quickly. If your price lists don’t move just as fast, margins can get squeezed. Meanwhile, sales reps may be making discount decisions order by order to keep customers happy, without always seeing what that discount does to the margin on the line. None of those decisions looks like much on its own. Across thousands of orders a year, though, the gap between what you should earn and what you actually earn can add up fast.
For a lot of distributors, the problem isn’t strategy. The setup behind their pricing hasn’t kept up with how fast costs change. If yours lives in a spreadsheet, a rep’s memory, and a flat price on each item record, the leaks are hard to see and even harder to stop. NetSuite already has tools that can help close those gaps without relying entirely on manual pricing processes. This post covers three of them: Multiple Prices, Quantity Pricing, and Gross Profit, plus the mass update tool that ties them to cost changes.
What This Actually Involves
Quantity Pricing adds quantity breaks to your pricing, so volume discounts come from rules you’ve already set. Reps no longer have to calculate those discounts on the fly.
Gross Profit puts estimated cost, gross profit, and gross profit percent right on sales transactions, both on each line and for the order as a whole.
You turn on each of these three features separately, and they work well together. Oracle’s documentation says Gross Profit isn’t directly dependent on other features, though related features such as Sales Orders and Inventory affect where and how you can use gross profit information.
Without these tools, discounting can end up running informally. For example, maybe a rep knows a customer “usually gets 12% off,” types over the price, and moves on. If nobody checks the margin impact until month-end, the order may have already shipped by then.
Turning On the Features
- Multiple Prices
- Quantity Pricing
- Gross Profit (in the Sales section)
Click Save.
Next, set your quantity pricing preferences at Setup > Accounting > Preferences > Accounting Preferences, on the Items/Transactions subtab. Maximum # of Quantity-based Price Levels sets how many quantity columns show up on item records. If different customer tiers should get different volume discounts, check Allow Quantity Discounts per Price Level on Schedules.
For Gross Profit, decide who can change estimated costs on a transaction. Only users with the Override Estimated Costs on Transactions permission can change the cost estimate type on a line. Keeping that permission limited helps prevent unauthorized changes to the cost assumptions behind your margin estimates.
Configuring Records
Customer records. On the Financial subtab, set each customer’s Price Level. For customers with negotiated pricing on specific products, use the Item Pricing subtab to assign a price level to an individual item. Item-level assignments override the customer’s default price level.
Quantity pricing schedules. Build reusable schedules at Lists > Accounting > Quantity Pricing Schedules > New, then pick one on the item record’s Sales/Pricing subtab. A schedule can calculate discounts by line quantity, by total quantity of an item across lines, by parent item, or by all items on the same schedule.
Cost estimate type. Also on the Sales/Pricing subtab, the Cost Estimate Type field controls where each item’s estimated cost comes from. Options include Average Cost, Last Purchase Price, Purchase Price, Preferred Vendor Rate and Purchase Order Rate. When supplier costs are moving, this choice matters. Last Purchase Price, for example, uses the most recent purchase price recorded by NetSuite, while Average Cost uses the item’s calculated average cost.
Using the Features in Practice
When a rep enters a sales order, NetSuite can apply the customer’s price level and any qualifying quantity breaks automatically. The rep doesn’t need to remember who gets what.
Before saving, users can see Est. Gross Profit and Est. Gross Profit Percent on each line on the Items subtab, and totals for the whole order on the Accounting subtab. If a manual price override pushes a line below your margin floor, the resulting estimated gross profit and gross profit percent are visible while the order is still open instead of at month-end.
Because Gross Profit values are also available in saved searches, reports, and KPIs, finance can use them to identify low-margin orders by rep, customer, or item and investigate where estimated margins are slipping.
How the Pieces Connect
- Price levels fill in automatically from the customer’s assignment, but users can still change the price on a transaction. The resulting estimated margin changes with the price. The features don’t prevent users from overriding it.
- Quantity breaks apply automatically based on the calculation method in the schedule. Nobody has to request them.
- Price changes don’t follow cost changes on their own. A change in an item’s underlying cost can affect estimated gross profit depending on the item’s Cost Estimate Type. Selling prices still have to be updated separately, such as through the Update Prices mass update.
- Gross profit is shown, not enforced. If you want low-margin orders to stop for approval, you’d add that separately, such as with a SuiteFlow workflow built around your margin thresholds.