Who needs Dynamics 365 Service Agreement Cost Prices?

Prices! When we talk Service Agreement Prices in Dynamics 365 for Finance and Operations, Enterprise Edition (aka formerly Dynamics AX), first let’s clarify if we are talking Sales Prices or Cost Prices. In short, Sales Price is what we charge on the customer invoice. Cost Price is used for internal purposes to analyze the spend and profitability of transactions, customers, projects, and service agreements. And yes, Cost can be somewhat subjective for certain transaction types.

Cost Prices should go hand-in-hand with Sales Prices when determining how to go about the setup in Dynamics 365.

Cost Price Tables are used in Project Management and Accounting for Hours and Expenses for Service Management the same as Sales Prices are, because of the foundational link between Projects and Service. Additionally, Hour and Expense Cost Prices can be entered from within a specific Service Agreement. As a result, the aforementioned Cost Price Tables are updated with Service Agreement specific criteria. The same priority logic used to determine Sales Price for Hour and Expense Transactions is used to derive Cost Price from the Cost Price Table for Hours and Expenses. Cost Prices have an effective date and can be defined down to the Project, Category, and/or Resource (worker) level.

Item Cost Pricing is set up in Inventory Management.

Fees and Subscriptions do not have Cost Prices. Effort can be put into allocating indirect costs directly attributable to projects, but that is a topic for another day.

Note: Cost Prices are necessary in order to use Cost-plus Pricing in the form of Sales Price Models for Hours and Expenses.

The Functionality described here is available in AX 2009 with limited criteria including employee, Project and Category. The functionality was expanded in AX 2012, utilizing the ‘Worker’ criteria and adding criteria options for Project Contract and Price Group. Dynamics 365 introduced the Role ID and Resource criteria in place of the ‘Worker’, to further enhance the capabilities.

Cost Price (hour)

When the time comes to enter the Cost Prices for Hours’ transactions, navigate to Project Management and Accounting > Setup > Prices > Cost Price (hour).

Cost Prices can be set up generically or very specifically with multiple criteria:

  • Role ID
  • Resource
  • Customer
  • Project Contract ID
  • Category
  • Project ID, and/or
  • Price Group

Dynamics 365 Cost Price per Hour

Careful thought and consideration should be given to what and how to enter Hour Cost Prices.  Visibility to the information, may cause undesired consequences.  Often weighted average, fully burdened, or standard rates are entered in support of cost analysis without giving visibility to actual hourly rates.  In addition, one might prefer to avoid entering resource specific amounts and opt for category, or generic Cost Prices.

Cost Price (expense)

Next comes the Cost Prices for Expenses to be used whenever an Expense journal is entered.  To enter the Cost Prices for hours’ transactions, navigate to Project Management and Accounting > Setup > Prices > Cost Price (expense).

Cost Prices can be set up generically or very specifically with multiple criteria:

  • Resource
  • Customer
  • Project Contract ID
  • Category
  • Project ID, and/or
  • Price Group

Dynamics 365 Cost Price by Expense

Cost Price information for Expenses originating from other sources such as Accounts Payable or Travel and Expense, come from the transaction directly.

Cost Price for a Specific Service Agreement

As mentioned, Cost Prices can be entered directly from within a specific Service Agreement, and in doing so, the Project ID is automatically populated in the table.  The data is stored in the single Cost Price Table.

The forms used when entering the Cost Price information from within a specific Service Agreement are identical to the forms used in Project Management and Accounting.  The Project ID populates when clicking New.

Dynamics 365 Cost Price for Specific Service Agreement

Dynamics 365 for Finance and Operations Cost Price for Specific Service Agreement

This feature makes it very easy to set up the Cost Prices specific to the Agreement at the time of Service Agreement creation, but when it comes time to maintain Costs (I.e. annual updates), having visibility of all of the Costs in one place, in Project Management and Accounting, makes it much more efficient.

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