Sage 50 UKI Ideas Portal

Bear with me on this on!

We breakdown the sales of our goods and services depending on nominal codes set out for each product allowing us to review and report on sales of various different business functions and product areas. I.e. products relating to support revenue monthly will have a different nominal code to this for annual contract, which will be different again to certain types of hardware or MSP licensing....

We use BOM extensively for product builds and they work fantastically when combining products or services all with the same Nominal code as when reporting we give the BOM the same nominal code and can report costs / revenue on this. The limitations are that as component prices fluctuate (multiple components from multiple suppliers and all changing at different times) we can not increase the out price of the component and it automatically update the BOM outprice, instead, we ned to review the actual price rise in monetary value and review each BOM that includes that component, and work out the price rise based on how many are in that BOM.

Secondly, reacting to the wishes of the client, many have voices a preference for a single price per user per month. Whilst licensing, support etc. are all invoiced per user per month, if we were to bundle support, licensing and monthly hardware rental for instance these 3 components would all have different nominal codes. Which poses 2 questions:

1 - What Nominal code would you give to the BOM (and if you created a new nominal for each mix - how would you apportion those values at the reporting stage)

2 - What affect would it have on the management accounts. I.e. 1 service could end up looking like it is almost Zero value whilst it is by far the biggest revenue stream we have for instance

What is the solution? "Bundled" Products. Quick Books appears to have this right.

You build a "Bundled Product" and you assign to it the component products including quantities as you would a BOM. However, you manage price files for the individual components at a client level (Making cost price fluctuations easy to manage) . When the bundles product is selected on a Sales order or Invoice it adds the correct list and quantities of components for the quantity you have selected. The out price of that bundles product is the sum of the components as per the price file for that client.

Now the clever bit:

1 - You can adjust the out price of a component at any time and it adjusts the out price of the bundle when it is next sold

2 - You can choose whether or not to show the components (with or without line prices) to the client

3 - The bundle products do not show on any reports therefore allowing you to report on profitability, sales volumes etc of the individual components that were included in the bundles allowing you to bundle anything you want from your products lists without losing any functionality of your reporting.

With more and more business's selling revenue services and clients wanting to know an all in one price I can only see demand for this increasing over time and I believe this would be an excellent addition to the BOM function (Possibly leave BOM as it is but add Bundling as an alternative method of joining parts for the sales process (After all when you are physically manufacturing, BOM Is probably the correct way to do things).