Are you ready to unlock the true potential of Block Pricing and Discount Schedules in Salesforce CPQ? These two powerful tools hold the key to optimizing your pricing strategies, but understanding their nuances is essential. Let's delve deeper into these features and gain a clearer understanding of their capabilities.
As a Senior Salesforce CPQ & Billing Consultant at Diabsolut, a global leader in Salesforce partnerships and renowned for our expertise in Revenue Cloud on AppExchange, I have had the privilege of collaborating with diverse manufacturers. In this dynamic landscape, where efficiency and precision reign supreme, choosing the right pricing tool for our clients is a critical decision we face regularly.
Now, let's embark on a journey to demystify Block Pricing and Discount Schedules. By the end of this article, you'll have a comprehensive understanding of how each feature operates and discover its respective strengths and applications. Join me as we explore real-world examples from industries like bicycles and granite manufacturing, and unveil the secrets to pricing success.
Shall we begin?
Block Pricing allows you to set different prices for different quantities of a product - REMEMBER: PRODUCT! Imagine you're a bicycle manufacturer, and you have distributors who buy bikes in large quantities. You want to encourage bulk purchases, but the pricing needs to be easy to manage and clear to the distributor. This is where Block Pricing becomes your best friend!
With Block Pricing in Salesforce CPQ, you can set a specific price for different quantity ranges, or 'blocks', that`s why the name is Block Pricing!
For instance, a pack of 10 bikes costs $250 each ($2.500 Net), while a pack of 11-20 bicycles costs $200 each ($4.000 Net). This strategy incentivizes larger orders and simplifies the pricing structure by grouping quantities together. Block Pricing is your way of implementing such a pricing structure, providing a seamless and automated way to handle quantity-based pricing variations.
- Flexibility: Block Pricing gives you the ability to set up pricing on a per-block basis, as opposed to a per-unit basis, allowing for more precise control over your pricing strategies.
- Tier-Based Pricing: Block Pricing allows you to implement tier-based pricing strategies effectively. This can be especially useful for B2B businesses where large orders are common. For example, if you sell a product where economies of scale come into play, you can offer lower prices at higher volumes, thereby incentivizing larger orders.
Don't forget to check out: Managing Billing Processes in Salesforce: Subscription Management and CPQ (Configure-Price-Quote)
When your distributor selects the number of bikes to order, Salesforce CPQ checks where it falls in the defined quantity ranges and adjusts the quote line price accordingly. It's simple, effective, and super-efficient.
Another great example is if you are a granite manufacturer. You extract massive granite blocks from the earth, transform them into beautiful, high-quality slabs, and bundle them together for sale to distributors and retailers. Your pricing model must be as robust as the granite you sell, and this is where Block Pricing shines!
So whether you're selling bicycles, software licenses, granite slabs or anything in between, Block Pricing offers a way to make your pricing strategy as smooth as a well-oiled bicycle chain.
On the other hand, Discount Schedules are about applying tiered discounts based on quantity. Rather than varying the unit price, Discount Schedules automatically apply a percentage discount based on the quantity ordered. Let's say you want to offer a 5% discount for orders between 100 and 200 units and a 10% discount for orders above 200 units. Discount Schedules are your tool for this job.
- Customer Incentives: Discount Schedules can be used as a tool to incentivize customers to purchase larger quantities. For instance, selling a subscription service might offer a 10% discount for purchasing 6 months upfront and a 20% discount for a year.
- Volume Pricing: Discount Schedules are very useful for implementing volume pricing strategies. For example, a retail business might offer a 5% discount when a customer buys more than 50 items, a 10% discount when a customer buys more than 100 items, and so on.
- Promotional Offers: Discount Schedules can also be a great way to manage promotional offers. For instance, you could run a holiday sale where customers receive an increasing discount based on how much they spend.
Remember, Block Pricing, as the name suggests, allows the pricing of a product based on different quantity ranges or "blocks." It is useful when selling products in packs or groups and represents the pack as a single quote line. The price is determined based on where the quantity falls within the specified ranges, and decreasing per-unit costs can be used as incentives.
Check out another amazing blog by Guilherme here: A Comprehensive Comparison of Salesforce Standard Quote and Salesforce CPQ for Manufacturing Companies
Discount Schedules, on the other hand, provide tier-driven discounts to the list price based on specified quantity or term ranges. They offer flexibility in applying values, whether it's a percentage discount based on the quoted quantity or a slab discount where units within a specific range receive discounts based on their tier's discount value.
While Block Pricing focuses on pricing based on quantity ranges, Discount Schedules provide volume-based discounts, considering the total quantity or terms of the quote lines.
By combining Block Pricing with Discount Schedules, you can apply both pricing strategies to the same product. Salesforce CPQ will apply the discount schedule pricing to units that fall outside the product's block pricing tiers.
Each approach has its advantages and is suitable for different scenarios. Block Pricing is ideal for selling products in packs or groups, while Discount Schedules are great for offering volume-based discounts. Choosing the right pricing strategy depends on the specific needs of the industry, such as the granite industry, where manufacturers sell bundles of slabs extracted from blocks.