5.2 Base Item Prices, Price Groups, and Price Tolerances
Key Takeaways
- Base sales and purchase prices on released products define fallback pricing when no active trade agreements exist, configured on the Manage costs, Sell, and Purchase FastTabs.
- The Price unit parameter enables fractional and sub-penny pricing by defining a quantity divisor, preventing rounding truncation on high-volume, low-cost components.
- Price groups categorize customers and vendors into shared commercial segments, serving as the Group-level linking mechanism in the trade agreement matrix.
- Accounts payable invoice price tolerances enforce 2-way and 3-way matching controls by setting percentage and amount thresholds that block posting when invoice prices exceed purchase order limits.
- Supplementary item groups automate promotional and mandatory product attachments, supporting free-of-charge items and optional order prompts based on order line quantities.
5.2 Base Item Prices, Price Groups, and Price Tolerances
Quick Answer: Base item pricing in Microsoft Dynamics 365 Supply Chain Management (D365 SCM) provides default fallback values when no trade agreements exist. Base purchase prices reside on the Purchase and Manage costs FastTabs, while base sales prices reside on the Sell FastTab. The Price unit parameter enables fractional and sub-penny pricing by defining a quantity divisor. Price groups aggregate customer and vendor accounts into shared pricing tiers for trade agreement management. In procurement, Invoice price tolerances enforce automated governance during 2-way and 3-way matching, blocking invoice posting when vendor invoices exceed purchase order amounts beyond allowed percentage or monetary limits.
1. Base Item Pricing Architecture on Released Products
Every released product in D365 SCM contains default pricing fields establishing baseline commercial values applied when an order line matches no active trade agreement.
Navigation Path
Product information management > Products > Released products
Master Data Pricing FastTabs
- Manage costs FastTab: Stores inventory base cost or standard cost, the Price unit denominator for inventory valuation, and the date timestamp of the last cost update.
- Sell FastTab: Holds the fallback Base sales price, sales Price unit, Sales markup, and fixed order-level Price charge.
- Purchase FastTab: Contains the default Purchase price, purchase Price unit, and Purchase markup applied to purchase orders.
Fractional Pricing and the Price Unit Parameter
Standard general ledger currencies support two decimal places ($0.00). High-volume discrete manufacturing and electronics distribution require micro-pricing (e.g., $0.0035 per resistor).
Entering $0.0035 directly truncates to $0.00. D365 SCM resolves this via the Price unit field:
- Configuration Example: Enter Price =
$3.50and Price unit =1,000. The effective price calculated on order lines is $\frac{$3.50}{1,000} = $0.0035$ per unit, eliminating decimal rounding loss.
2. Price Charges, Price Quantities, and Markup Calculations
D365 SCM allows configuring structured markups directly on the released product:
- Price Markup: Added directly to the base price before dividing by the price unit. If Base Price =
$100.00, Markup =$10.00, and Price Unit =1, the resulting line unit price is$110.00. - Price Charge: Applied as a fixed monetary charge to the line regardless of ordered quantity, or prorated across the line based on order quantity.
Net Order Line Amount Formula
[!NOTE] When Latest purchase price or Latest cost price is enabled on the Released Product, D365 SCM automatically updates the base purchase price whenever a new invoice or cost calculation is posted.
3. Customer and Vendor Price Groups
Maintaining individual prices for thousands of accounts creates administrative overhead. Price groups aggregate accounts sharing identical commercial terms.
Navigation Paths
- Customer Price Groups:
Sales and marketing > Setup > Prices and discounts > Customer price/discount groups - Vendor Price Groups:
Procurement and sourcing > Setup > Price/discount groups
Group Types in D365 SCM
- Price group: Links accounts to base prices in trade agreements.
- Line discount group: Links accounts to item-specific line discount agreements.
- Multiline discount group: Aggregates line quantities across an entire order for tiered discounts.
- Total discount group: Applies order-level gross value discounts.
Linking Price Groups to Accounts
- Customer Master: Open
All customers > Sales order defaults FastTaband assign the code to Price group. - Vendor Master: Open
All vendors > Purchase order defaults FastTaband assign the code to Price group.
Once assigned, any trade agreement line configured with Account code = Group matching this code automatically applies to orders created for that account.
4. Accounts Payable Price Tolerances and Invoice Matching
In procurement, organizations enforce financial governance by validating vendor invoices against purchase orders and receipts via Invoice matching.
Navigation Paths
Accounts payable > Setup > Accounts payable parameters > Invoice validation FastTabAccounts payable > Setup > Invoice matching > Price tolerances
Matching Policies: 2-Way vs. 3-Way
- 2-Way Matching: Validates the purchase order unit price against the vendor invoice unit price within price tolerances.
- 3-Way Matching: Validates the purchase order unit price against the invoice unit price and verifies that invoiced quantities match physically received product receipts.
Price Tolerance Configuration Architecture
D365 SCM supports two complementary tolerance metrics:
| Tolerance Metric | Operational Definition | System Evaluation Rule |
|---|---|---|
| Percentage Price Tolerance | Allowable percentage deviation between PO unit price and invoice unit price. | $\left |
| Amount Price Tolerance | Maximum allowable monetary variance on the invoice line. | $ |
Price Tolerance Hierarchy
When evaluating invoice price variances, D365 SCM searches in strict priority:
- Specific Item and Vendor Combination
- Item Tolerance Group and Vendor Combination
- Specific Item and Vendor Tolerance Group
- Item Group and Vendor Group
- Company-Wide Parameter (Accounts payable parameters)
If an invoice violates price tolerances, a visual discrepancy indicator appears, and posting is blocked until approved via the Invoice matching details form or workflow.
5. Supplementary Items and Supplementary Item Groups
Supplementary items are secondary products attached automatically or optionally to an order when a primary item is transacted (e.g., free gifts, manuals, protective cases, or disposal containers).
Navigation Paths
- Supplementary Item Groups:
Sales and marketing > Setup > Prices and discounts > Supplementary item groups - Released Product Configuration:
Released products > Sell tab > Supplementary sales items(orPurchase tab > Supplementary purchase items)
Configuration Parameters
- Item code / Account code: Supports
Table(single entity),Group(item or customer group), orAll. - Supplementary item number: The SKU of the item to attach.
- Minimum quantity & Multiple: Threshold quantity of the primary item required and the sizing increment (e.g., 1 add-on per 10 primary units).
- Free of charge: Automatically applies a 100% line discount to the supplementary item line.
- Optional: When checked, D365 SCM presents an interactive prompt during order entry, allowing representatives to accept or decline the add-on rather than automatically inserting it.
Exam Tips and Common Traps
[!TIP] Exam Tip — Sub-Penny Pricing: When purchasing small items where unit cost is a fraction of a cent and the currency supports two decimals, adjust the Price unit on the product record, not global currency decimals.
[!IMPORTANT] Exam Tip — Percentage vs. Amount Tolerances: An invoice can pass a 5% percentage tolerance but fail an Amount tolerance if order volume is large. For example, a 2% variance on a $1,000,000 order is $20,000, exceeding a $500 amount ceiling.
[!WARNING] Exam Trap — Supplementary Items Automatic vs. Optional: To allow customer service representatives to prompt customers before adding an accessory to an order line, the Optional toggle must be selected on the supplementary item record.
A distribution company purchases specialized electronic microchips in bulk packaging. The vendor invoices the microchips at a price of $0.0045 per individual chip. In Dynamics 365 Supply Chain Management, standard currency decimal precision is configured to two decimals ($0.00). The purchasing manager must configure the base purchase price on the released product so that purchase orders reflect the exact unit cost without rounding errors. How should the functional consultant configure the base purchase price on the released product?
An organization enforces a 3-way invoice matching policy for all inventory receipts. The corporate procurement policy permits a price variance between the purchase order unit price and vendor invoice unit price of up to 3%, but the total variance on any individual invoice line must never exceed $50.00 USD. If an invoice exceeds either limit, the system must hold the invoice for manual approval. How should the functional consultant configure invoice price tolerances in Accounts payable?
A commercial tool manufacturer sells heavy industrial drill presses. Under a promotional program, whenever a customer orders at least 2 drill presses, the customer is eligible to receive 1 protective equipment kit (Item SAF-01) free of charge. The sales order entry clerk must be prompted with an interactive selection window during sales order line entry to decide whether the customer wants the safety kit included. How should the functional consultant configure this requirement?