Configuring derived pricing

  • Release version: Zurich
  • Updated November 11, 2025
  • 2 minutes to read
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    Summary of Configuring Derived Pricing

    Derived pricing allows pricing administrators or managers to automatically set product prices based on other products or transactional values, enhancing efficiency in pricing strategies. This feature is beneficial for dynamically defining pricing rules relative to total contract values or other related products.

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    Key Features

    • Dynamic Pricing Rules: Establish rules that derive pricing automatically when products are added to quotes or orders.
    • Derived Pricing Matrix: Manage the relationship between target and source product offerings, context variables, and calculation formulas.
    • Use Cases: Applicable in various industries, such as manufacturing, telecom, and SaaS, allowing businesses to set pricing based on related products or subscription totals.

    Key Outcomes

    By implementing derived pricing, customers can expect:

    • Automated pricing adjustments based on predefined rules, leading to improved pricing accuracy.
    • Increased operational efficiency by reducing manual pricing tasks.
    • Enhanced competitiveness through strategic pricing models tailored to specific product offerings.

    Setting Up Derived Pricing

    To configure derived pricing, pricing admins or managers should:

    • Select the Derive price option when creating a price list line.
    • Utilize the Derived Pricing Matrix to define product relationships and establish the calculations for derived pricing.

    Be aware that related pricing is not supported for sales agreement quote types.

    Automatically set the pricing for a product by deriving its pricing from other products or pricing sources such as transactional values in quotes or orders.

    Derived pricing overview

    As a pricing admin or manager, you can define rules for deriving product pricing dynamically, relative to other products or transactional values such as the total contract value (TCV) or annual contract value (ACV). When products with derived pricing are added to a quote or order, the derived pricing is applied automatically. Derived pricing can be used in various scenarios:
    Table 1. Use cases for derived pricing
    Pricing scenario Industry use case Calculation
    Price accessories relative to related base equipment Manufacturing: Sell an extended warranty that is 10% of the price of a high-end industrial machine Define the warranty pricing as 10% of the referenced equipment:

    Product A price = 10% of Product B's price
    Price add-ons that are based on Product X and Y total Telecom: Sell 24x7 support as an add-on that is 10% of all the subscription products in a quote Define 24x7 support add-on as 10% of the quote total:

    Product C price = 10% of the price for Product X and Y
    Price add-ons based on a percentage of all products purchased SaaS: Sell product support service as an add-on that is 15% of subscription fees for all software products purchased Define the product support add-on as 15% of subscription fees for all software products:

    Product D price = 15% of all subscription fees
    Derived pricing for a product involves the following items, which you manage through the Derived Pricing Matrix:
    Table 2. Elements in derived pricing
    Item Description
    Target product offering Product offering for which pricing is derived.
    Source product offering One or more product offerings whose pricing is the basis for the target offering.
    Transaction header value (context variable) Quote-level header value used as the pricing basis to calculate the derived price, such as the annual contract value (ACV).
    Scope Level from which the context variable is used: bundle or cart
    Formula calculation Percentage used to calculate the derived pricing
    Price point Price at which the product is sold: Unit list price, Unit net price, and Cumulative net price.

    Limitations for derived pricing

    Related pricing are not supported for quotes of type sales agreements.

    Setting up derived pricing

    To implement related pricing, follow these tasks:
    Table 3. Derived pricing configuration tasks
    Task Description Role
    Enable related (derived) pricing for a price list line When creating a price list line, select the Derive price option. Pricing admin or manager
    Create rules for derived product pricing Use the Derived Pricing Matrix to define the product relationships and calculations used when deriving product pricing. Pricing admin or manager