Setting up your Database

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23.1.8 Price Revisions

OpenERP supports several methods of calculating and automatically updating product costs: • Standard Price: manually fixed, and • Standard Price: revalued automatically and periodically, • Average Price: updated at each receipt to the warehouse. This cost is used to value your stock and represents your product costs. Included in that cost is everything directly related to the received cost. You could include such elements as: • supplier price, • delivery charges, • manufacturing costs, • storage charges. Standard Price The mode of price management for the product is shown in the tab Information on the product form. On each individual product, you can select if you want to work in Standard Price or on weighted Average Price . Tip: Simplified Interface If you work in the Simplified interface mode you will not see the field that lets you manage the price calcula- tion mode for a product. In that case, the default value is Standard Price. The Standard Price setting means that the product cost is fixed manually for each product in the field Cost Price . This is usually revalued once a year based on the average of purchase costs or manufacturing costs. You usually use standard costs to manage products where the price hardly changes over the course of the year. For example, the standard cost could be used to manage books, or the cost of bread. Those costs that can be fixed for the whole year bring certain advantages: • you can base the sale price on the product cost and then work with margins rather than a fixed price per product, • accounting is simplified because there is a direct relationship between the value of stock and the number of items received. To get an automated periodic revaluation of the standard price you can use the action Update on the product form, enabling you to update prices of all the selected products. OpenERP then recalculates the price of the products as a function of the cost of raw materials and the manufacturing operations given in the routing. Average Price Working with standard prices does not lend itself well to the management of the cost price of products when the prices change a lot with the state of the market. This is the case for many commodities and energy. In this case, you would want OpenERP to automatically set the price in response to each goods receipt movement into the warehouse. The deliveries exit from stock have no impact on the product price.