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In the dynamic world of sales and product pricing, understanding and implementing efficient pricing strategies is key to enhancing customer satisfaction and boosting sales performance. Salesforce CPQ (Configure, Price, Quote) offers a sophisticated pricing model known as Block Pricing, designed to simplify and optimize the pricing process for varying quantities of products. This blog delves into the nuances of Block Pricing and its implementation in Salesforce CPQ, providing readers with invaluable insights into:
- Understanding Block Pricing: Grasp the basics of Block Pricing and how it differs from traditional per-unit pricing models.
- Setting up Block Pricing: Learn the step-by-step process to configure Block Pricing tiers on a product within Salesforce CPQ.
- Navigating Overage Rates: Discover how to handle quantities that exceed your highest pricing tier with overage rates.
- Practical Use Cases: Explore real-world scenarios where Block Pricing can be applied to solve complex pricing challenges.
Let’s get started!
Block Pricing
A product can be priced based on different quantity ranges called “Block Prices” in Salesforce CPQ. A flat price for a range of quantities is used instead of multiplying by the number of units.
For example, when a sales rep adds a product to a quote, CPQ checks the quantity ranges on the quote line and prices it accordingly. A pack of 1-20 units can cost $20, while a pack of 20-40 can cost $38.
Block Price Tiers
- Lower Bound: The lowest quantity the block price tier supports.
- Upper Bound: The first quantity the block price tier does not support.
- Price: The price corresponding to the block price tier, which replaces the pricebook price.
Set up Block Pricing
- On the product, click on the “Related” tab
- In the “Block Prices” related list, click on “New”
- Enter the “Price Name”.
- Add the quantity to be included as the “Lower Bound”
- Add the “Upper Bound” (not inclusive)
- Enter the price in the “Price” field
- Click the + button to add more tiers
- Click “Save”.
Overage Rate
A special field allows setting a per-unit price for any quantity above the highest tier.
The additional per unit charge is added on top of the block price selected and calculated by taking the difference between the minimum quantity for the block and the quantity entered for that line item. For example, a business sells “Toner Cartridge Recycle” using two tiers, handling up to 100 recycled toners. For quantities above 100, the overage rate allows an additional per-unit price.
Key Considerations
- On the product selection page, Salesforce CPQ shows the standard price of the block-priced product. However, when this product is added to the quote, the quantity is evaluated on the quote line, and appropriate pricing is used.
- There is a limit on the number of tiers supported for block pricing; up to 50 tiers are supported.
- Block pricing is incompatible with an asset conversion of one per unit.
- Partial amendment of a block-priced product is not supported in Salesforce CPQ. Instead, a line for the new amount should be added after cancelling the existing quote line.
- The snapshot information fields on the block price records are no longer supported.
- Users with read-only access to block price and its fields can create block price records by cloning an existing record.
Use Case 1
Sun Solar offers “Panel Cleaning” services to their customers. The number of panels to be cleaned determines the pricing. Between 11 and 10 panels, the panel cleaning would cost $40. Between 11 and 20 panels, the cost of panel cleaning would be $75. How can the CPQ Specialist solve this requirement?
Solution: Configure “Block Prices”.
Reason: A product can be priced based on different quantity ranges called “Block Prices”. The CPQ Specialist can create two tiers to accommodate the number of panels and price it accordingly. A block price-related record can be created on the product, which, when added to the quote, will be priced based on the quantity of the quote line.
Use Case 2
Auto Car has a block-pricing structure for one of its products, “Filter Service”, but wishes to price the product per unit beyond the upper bound of its second Block price tier. What should be configured by the CPQ Specialist to meet this requirement?
Solution: Configure “Overage Rates”
Reason: A particular field allows setting a per-unit price for any quantity above the highest tier. The CPQ Specialist can create a currency field with Field Name and Field Label “OverageRate” on the “Block Price” object to use overage rates.
Conclusion
In wrapping up, mastering Block Pricing in Salesforce CPQ not only streamlines your pricing strategies but also unlocks new dimensions in customer satisfaction and sales efficiency. Understanding the fundamentals, setting up pricing tiers, and managing overages are crucial steps toward leveraging Salesforce CPQ’s full potential for your business needs.
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