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

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.

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