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Customer Paradigm

I
hope you enjoyed last week’s article about the six types
of Magento products (Simple, Virtual, Downloadable,
Configurable, Grouped and Bundled.)

This
week, I want to delve into how pricing works within
Magento. Why? This is another area that can be complex,
and not everyone knows how to do this successfully.

This
week: Magento Pricing Information

1.
Simple Price.

When
you add in a product in Magento, you first
choose the product type. In this case, we’ll
go with a simple product (i.e. no options
like size).

After
adding in the product name and a short description
into Magento, you next set the product’s
price.

Let’s
say the regular price of a new product is
$350. This is a simple product; for our
purposes let’s say it’s a Canon 50mm f/1.4
lens. (If you’re a photographer, this is
a must-have lens in any camera kit.)

On
the new Product page, you’d add 350 to the
price field:

2.
Group Pricing.

Magento
allows you to set up prices for specific
groups, too.

For
example, Wholesale customers (who are logged
into the system, and have been added to
the Wholesale customer group) can always
have a price of $225.

If
I want to set up a new group, Friends of
Jeff, to give them special pricing, they,
too can have a group price for the product.
In this case, Friends of Jeff can purchase
the product for $299.

3.
Special Price (i.e. Sale Price)

Let’s
say you want to set a special sale price
for this product, but just for a few days.
And you don’t want to have to remember to
wake up in the middle of the night to set
the price back to it’s regular level.

The
special price option allows you to set a
sale price for a specific time period (i.e.
a few days, a week, month or more).

4.
Tiered Pricing (i.e. Buy 10 or more for
a lower price)

If
you happen to have a lot of this product
in inventory, it’s nice to create an incentive
for someone to purchase many of them, in
exchange for a discount. (Personally, I
happen to love this lens, and have two copies
of it.)

In
this case, you can create tiered pricing
by selecting the website and group, and
then adding a quantity and price.

For
all groups / all websites, if someone purchases
10 or more, the price drops to $290. If
you order 50 or more, the price drops to
$260.

For wholesale customers (they are logged
in, and you’ve approved their account as
a Wholesale customer), you can set different
tiered pricing and quantitites. For example,
you could offer a $210 price if they purchase
5 or more, and a price of $195 each if they
order 10 or more.

The
discount will be displayed on the front
end of the website, depending on the Website
and customer group. For example, a retail
customer would see a price of $315 (due
to the special sale price, above), and a
price as low as $260 (if they order 50 or
more).

While
a typical merchant might not want all of
these options on their site for each specific
product, there’s a lot you can do to encourage
people to buy large quantities, in exchange
for a discount.

5.
Applying Minimum Advertised Pricing (MAP)

I’m
sure you’ve been to a site where instead
of the price, there is a message, "We’re
not allowed to show you the low, low price
for this product; click to view the price
instead."

This
is because some merchants are not allowed
to display a price on the Website that is
lower than the MSRP – the manufacturer’s
suggested retail price. (This was a big
source of litigation a few years ago, and
the courts sided with manufacturers).

However,
you might want to offer your customers a
better price, while still complying witth
the MSRP requirement.

Magento’s
Minimum Advertised Price (MAP) allows you
to do this.

If
you want to do this, you’ll need to enable
this in the system configuration area first.
Then on a per-product basis, you can have
the product use the MAP rule (Yes, No, or
Use Config):

The
next option allows you to set where the
price is displayed. You can have the actual
price show up after you add the product
to the cart; just before you order the product
on the final checkout page; on gesture (i.e.
a pop-up window); or use a global configuration.

Finally,
you can set the MSRP for this area.

6.
Set Tax Class Pricing.

Most
of the time, all of your products are likely
subject to the same tax class. But in Magento,
you’re able to set the tax class for each
product individually. For example, this
product is subject to normal sales tax,
but a downloadable PDF that you sell might
not be subject to the same tax class.

In
this case, we’ll set it up as a taxable
good. (Other options are: shipping or non-taxable.)

7.
Final View of the Pricing Screen:

Here’s
the final view of the pricing screen:

As
a review, the standard price is $350.

We
have a group price of $225 for Wholesale
customers, and $299 for the "Friends
of Jeff" customer group.

I’ve
set a $315 special (sale) price for March
3, 2014 – March 6, 2014.

I’ve
created tier pricing, so that anyone coming
to the site can purchase 10 or more and
only pay $290 each, or purchase 50 or more
and pay only $260 each. I’ve also set a
tiered price for the wholesale group as
well ($210 each for five or more; $195 for
10 or more).

I’m
using the standard configuration for Minimum
Advertised Price (MAP), and have set the
MSRP to $375. Finally, the tax class is
set as a taxable good (tax rates are configured
elsewhere).

I
hope this helps!

Thanks,

Jeff FinkelsteinFounder, Customer Paradigm
Jeff
Finkelstein
Founder, Customer Paradigm

303.473.4400

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