Delivered Pricing

Delivered pricing refers to a sales price that includes the cost of freight as part of the value. This can be useful when the seller is responsible for arranging the transportation of items to a customer's location. Because the seller knows the cost of freight at the time of sale, it is possible to factor this amount directly into the sales price. If, on the other hand, the customer is responsible for transporting purchased items from a seller's facility, or the cost of freight is not known at the time of sale, it would be necessary to keep the cost of freight separate from the listed unit price of the sold items.

When entering the results of a sale in the General Ledger, the cost of freight would typically not be recorded to the same revenue account as the actual value of the sold items. Therefore, while it is desirable to present a single unit price to the customer, from a financial perspective it is necessary to distinguish between these two values.

Delivered Pricing Configuration

When freight charges are included in the sales price of items, they are added to each existing line on a sales document. However, a company may not wish to calculate these freight charges at the document line level. For example, it may be that the per unit rate that is applied to each item on a sales order is based on the total quantity or weight of all items.

Delivered pricing is activated in the Delivered Pricing Calc. Method field in the Sales & Receivables Setup window. In this field, you can indicate whether freight charges should be calculated for individual document lines, or based on the document as a whole.

The freight charges that are added to the price on a sales line are calculated according to a codeunit that has been developed specifically for this purpose. This allows a company to determine its own business rules for freight charge calculation, then create a codeunit that will incorporate this criteria. Once developed, this codeunit is assigned in the Del. Pricing Calc. Codeunit ID field in the Sales & Receivables Setup window.

When creating a codeunit, one should take the calculation method into account, as this setting could impact the manner in which the codeunit is developed. For example, if a company wishes to calculate freight charges at the header level, a developer would have the option of creating a codeunit that instructs the program to view all existing sales lines on a document when calculating freight.

FOB Pricing

Once a calculation method has been selected and a codeunit assigned, delivered pricing will be applied globally to all sales activities. It may be that in some situations you do not wish to include freight on a sales order. This can be accomplished by utilizing the FOB (Free On Board) pricing feature. When FOB pricing is activated, the program will not calculate any freight charges for the items on a sales order, and only the standard sales price will be used.

You can indicate that FOB pricing will always be permitted for a customer by selecting the FOB Pricing field on the Invoicing FastTab of the Customer card. The setting in this field will act as the default for a corresponding field on the Invoicing FastTab of the Sales Order window. If necessary, you can also turn FOB pricing on or off for individual sales orders by changing the setting in this field.

Freight Calculation

Freight is calculated for every line on a sales document according to the assigned codeunit. The freight amount is added to the unit price on the line, resulting in a single amount that incorporates both the item's initial sales price and the additional freight charge. Separate columns break down this value by displaying both FOB and freight amounts.

When calculated at the document line level, freight is automatically added to each line as it is created. If changes are made to a line (an adjustment to the quantity, for example), the freight amount will be automatically updated.

It is not possible to automatically determine freight if calculations are performed at the header level. This is because the information on each sales line may have an impact on the freight amounts that are calculated for all lines. When all the items have been entered on the sales lines, you can calculate the freight charge for the entire sales document by clicking Actions, pointing to Functions, and then clicking Calculate Freight. If changes are made to the sales lines that will impact the calculated freight charge, you must perform this activity again.

It is possible to instruct Dynamics NAV to automatically calculate freight for a sales document as part of another activity. Placing a check mark in the Calc. Freight on Release/Post field in the Sales & Receivables Setup window will instruct the system to automatically calculate freight amounts whenever a sales document is released or posted.

At any time, the user may manually change the calculated freight charges on a sales line. However, once a freight charge has been adjusted in this manner, the program will no longer update it if any changes are made to the sales order. If you have manually changed a freight charge, and wish to re-calculate the amount according to the assigned delivered pricing codeunit, you can do so by clicking Actions, pointing to Functions, and then clicking Calculate Freight.

Freight Charge Posting

One of the major benefits of delivered pricing is that freight charges are incorporated into an item's sales price, resulting in a single amount being presented to the customer. For accounting purposes, however, it is necessary to keep the initial sales price and freight amount separate from each other.

When a sales order is posted, any freight charges are entered in a different G/L account than the standard account to which sales revenue is recorded. This account is specified in the Sales Account (Freight) field in the General Posting Setup window. A freight account must be entered for every specific combination of general business and general product posting group that will be used on sales orders. You will not be able to post a freight charge that has been assigned to a document line if these accounts have not been properly set up.

While freight is posted to a separate G/L account, the posting process itself is no different for freight than it is for the rest of the sales line.

Freight charges will also post to the associated value entries. The same breakdown of FOB and freight amounts that is present on sales lines is also provided for value entries.

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