In this ShellBlack Whiteboard episode we dive into Opportunity Products and Pricebooks. Shell starts by defining what can be a product (a physical item or a service) and that when Products are added to an Opportunity they start calculating and driving the Opportunity Amount field. He then goes over the standard fields on Products and how they are used, and gives examples of what could be a custom field.
Shell then tackles Pricesbooks, which are subsets of your entire product catalog, and why they can be helpful to your users. Through an example using four Pricebooks, Shell illustrates how they contain subsets of Products, and that if needed, you can have unique Product pricing by Pricebook. Lastly he covers how the Active checkbox is used on both Products and Pricebooks and when working with an Opportunity, you can only use Products from a single Pricebook.
View this video on YouTube: http://youtu.be/_kyofNVvDMU
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Transcript of video:
Hello and welcome to another edition of ShellBlack Whiteboard – where we help you get the most out of the Salesforce Platform. I’m Shell Black, your host, President and Founder of ShellBlack.com and Salesforce MVP. We’re still talking about Opportunities and we’re going to get into another part of that and that’s Products and Pricebooks, so let’s get into it.
So, first of all, what’s a Product? Why would we have Products? A Product is really a catalog of the things that you sell. What you can sell as a Product could be a physical Product or it could be a service – so professional services, consulting services, whatever it might be. So why would we even go through this exercise of associating Products to an Opportunity? Well, it really helps us with reporting because then we can tell through a report what we’re selling a lot of, who are we selling to and for how much. Products is an object just like anything else in Salesforce like an Account, Contact or an Opportunity. You have page layouts. You have custom fields. When you turn on Products and you start using Products to associate Products to an Opportunity, when you start adding Products with pricing it takes over the Amount field on the Opportunity.
We’ll get into this more in a different segment, but as you can see in this example I’ve got $100 Product, $50 Product, $25 Product. As I’ve added those three Products, it will drive the Amount field and start updating that automatically so you don’t have to do the math.
Okay, more on Products. Let’s talk about the standard fields for a second. Product Name, it’s a free form text however you want to make that description of that Product, a label. Just realize when you’re creating this name, make it something that your sales people could identify the Product quickly, so when they’re seeing a list of hundreds of Products, they can tune in real quick and see what that is.
Product Code is an out of the box field. It’s really how you want to use it. You can use it as a skew number like a stock keeping unit or maybe you want to put the manufacturers part number in there, whatever you want to use for Product Code.
Product Description, big free form text. If you have a lot of technical specs about a Product, go to town. It’s a really large text field.
Product Family, this is a pick list and it’s really to help you categorize your catalog. If you think about going to shop on Amazon, you want to catalog those Products. A lot of Products you can have, apparel, sporting goods, electronics, music, film, audio, whatever it might be. It’s just a pick list to categorize your Products to help your sales people find stuff quicker.
The Active check box. This is an important little field. If it is active, it is visible to your users and they will be able to find that Product and associate it to an Opportunity. If you want to retire a Product, maybe it’s no longer made, whatever it might be, and you want to retire it and not make it visible to users to keep selecting an Opportunity. You uncheck that box and users will not be able to add it to new Opportunities.
So those are the standard fields. Let’s talk about custom fields. Again Products as a standard tab, standard object, you can do custom fields. You could probably do a lot with this. I’ll give you some that I see a lot, COGS or "Cost Of Goods Sold," the cost of the Product. You have a standard price. We’ll talk about in a little bit, which is your sale price, but your cost of goods is the cost of that Product. So when you do that, you can actually look at your margin, what was the sale price when we added it to an Opportunity versus the cost of goods to get margin dollars and cost of goods sold.
Other attributes for a Product to help you categorize, it could be things like color, size, weight, does it have a warranty, maybe you want to have a check box to show if it’s taxable or not. You can also do a look up to an Account. If you had a manufacturer field with a look up to the account, you could then run a report to say how much of our Product catalog is from this manufacturer.
The last thing I have on this side of the board, and I’m sorry it’s kind of low there, is Standard Price. So when you create a Product in the database, Salesforce wants you to give it a Standard Price. So maybe it’s suggested retail price, what you think this Product should sell for. With that Standard Price, we’re going to segue over to this side of the board.
We’re going to start talking about this thing called Pricebooks. So Pricebooks are way to take your full Product catalog, maybe you have a hundred or a couple thousand Products, and then break that Product catalog into sub sets with distinct pricing. The reason why you’re doing this really is to try to make it easier for your sales people. Let me get this into a real world example. This will make a lot more sense.
Over here on this side of this chart, I’ve got Product A with a standard default list price of $100, Product B for $50, Product C for $200 and Product D for $75. We have four Pricebooks, 2013 Pricebook, 2014 Pricebook, a government Pricebook, and a reseller Pricebook. Product A which defaults… It has a Standard Price of $100. In the 2013 Pricebook, we had it as a sell price of $100. The 2014 Pricebook, the price defaults to $110. That Product is not available in our government Pricebook. When we sell it to resellers using this Pricebook, its $90.
If you look at some of these others, Product B $50, government $45, reseller $40. This Product’s not available in the government Pricebook. These two Products are not available to reseller’s, so maybe these are "not for resale" Products. So what we’re doing is we’re taking our Product catalog that has our default Standard Price, but when we start an Opportunity, we can pick a Pricebook. For sales people, they don’t have to think about, "When I’m selling to the government, I’m only allowed to sell these Products. When I do sell to government, I got to remember we discount it to this," or, "I don’t want to remember that when we sell to reseller’s, only these Products are eligible for reseller. When we do, we’ve got to negotiate a pricing for that."
When a sales person kicks off an Opportunity, if you have multiple Pricebooks, it forces the sales person down a path where they can only see the Products available in that Pricebook and you get to set those prices. Hopefully that starts to make sense why you would have multiple Pricebooks. It’s just so the sales person doesn’t have to go somewhere else and look at a chart and try to figure out what’s my discount, what should I sell this for.
A couple other things. Pricebooks are now a tab in Salesforce. It used to be kind of a secondary citizen in the database. They used to squish Pricebooks inside the Products tab. Just recently they’ve promoted that to its own tab. You can have custom fields on your Pricebook. You can also have page layouts, record types, all that good stuff.
The standard fields for a Pricebook are very few. There’s only a handful out of the box. A name, so the name would be 2013 Pricebook, 2014 Pricebook, government Pricebook, a Description, if you need to put more information around that, and Active check box. So just how the active check box on Products made it visible to sales people, the same thing with Pricebooks.
So let’s look up here. We’ve got our check boxes going across This is supposed to be our Active check box. Notice that I do not have the 2013 Pricebook active. We’ve retired that. We’re now in 2014. I don’t want people selling Products at these prices anymore. I want people selling on this year’s current catalog. Maybe we have a price increase from 2013 to 2014. This one went up $10. This Product stayed the same. This Product went up $10. When I uncheck this box, people are no longer able to start Opportunity using this set of prices.
When you check of an Opportunity and you have multiple Pricebooks that are active, they’ll get a piclist that says when you add a Product it’ll stop them and say, "Okay, what Pricebook do you want to use for this Opportunity?" You can only use one Pricebook per Opportunity. So if I’m a sales person, I’m starting an Opportunity, I can’t cherry pick one Product out of the government Pricebook, pick another Product out of the reseller Pricebook, pick another Product out of the 2014 Pricebook. You have to only have single Products from a single Pricebook on an Opportunity.
So that wraps up our segment on Products and Pricebooks. I hope you enjoyed it and learned a couple things today. If you want to give some feedback on how we’re doing, you can reach out to us a couple different ways. You can hit me on twitter Shell_Black, or you could email me Whiteboard@ShellBlack.com. I would love your comments. Thanks again for joining us and we hope to see you soon.