How does it work?

The Rates File works off the item category code and cost. By finding the matches to the category and cost in the Rates file, the system can offer the user multiple pricing choices at the time of the rental.

The cost is then multiplied times the "rate turns" and this becomes the potential income for this item.

The potential income is divided by the number of "rate periods" and this becomes the rental rate for this item. The inventory item's cost must fall within this range in order for this Rates record to be available. If we change the cost range, ONLY the inventory items which cost falls in that range would qualify for this rate. The inventory item's category must match the Rates File category in order for this price rate to be available.

You MUST input pricing records for each category you are renting. You may have to input multiple records for these categories if you want different "rate months" calculated.

Rate turns is the field that when multiplied by the cost, will give you the potential income for that rental.

In the Inventory the Rates that apply to a particular category of inventory with a particular cost are listed, so you can see what the available rental rates are for each individual inventory item.

This example shows that this dryer has (3) three different rates available, two for 18 months and one for 12 months. The rental rates are slightly different based on the term of the agreement.

When you calculate the remaining rates the Weekly Divide Factor for this example is set to 4.0.

1696 / 4.0 = 4.24

This is slightly higher than if you had calculated the rates based on the weekly term. 305.33 / 78 weeks = 3.91. If the Weekly Divide Factor was 4.333, the potential income of 305.33 would be realized by every payment method, but with the Weekly Divide Factor set to 4.0, the Weekly and Bi-weekly rental rates are slightly higher.

When renting inventory, the user selects the payment method and agreement terms prior to selecting the item so only the Rates records that apply to this number of periods would be listed.

When the user choose to rent by agreement terms, the system looks up all related rates records and lists them for the user to choose from.

There are several different methods for pricing your inventory using the Rates file.

Category Pricing

Inventory is priced at a specific rate depending on the category.

Cost Pricing

Inventory is priced based strictly on the cost of the inventory item.

Using Min/Max to Control Pricing

Inventory is priced based on the cost, but restrictions for minimum and maximum pricing are used to control how low or high the rate can be.

Department Pricing

Inventory is priced at a specific rate depending on the department.

Weekly Divide Factor

The Weekly Divide Factor determines how the remaining rates are calculated.

4.333

When you have the Weekly Divide Factor set to 4.333, the system calculates the Monthly equivalent for the rate you have entered, and divides the Monthly rate by 4.333 to calculate the remaining rates. In this way all the rates, for all the methods will collect the potential income calculated by multiplying the cost X turns.

4.0

When you have the Weekly Divide Factor set to 4.0, the system calculates the Monthly equivalent for the rate you have entered, and divides the Monthly rate by 4.0 to calculate the remaining rates. In this way the monthly rate will collect the potential income calculated by multiplying the cost X turns, and the remaining rates (weekly and bi-weekly) will collect a slightly higher amount. This is offering a discount to Monthly customers, while continuing to collect the potential income.

Operation > Utilities > Company Setup > Misc. Information Tab

Some frequently asked questions: (click each question for answer)

•	What do I do if I want used inventory to be deeply discounted?

In the Inventory file if you have several 19" televisions, you may have some that are brand new and some that have been rented and returned by a customer. For those items that are returned, or used the system can discount the rental rate or the terms of the item (or both) in order to rent a used piece of inventory quicker.

Use Rates?
Ignore Min/Max?

By NOT check the Ignore Min/Max field you are telling the system that you want to use the minimum and maximum price fields. When using the minimum and maximum price fields with discounting the system checks to see if the price falls within the minimum and maximum range BEFORE applying the discount. This could result in a discounted rate less than the minimum price.

Ignore Min/Max?

By checking the Ignore Min/Max field we are telling the system that we are not concerned with the minimum and maximum calculated price, we want the system to calculate strictly based on the cost of the inventory item. Discounting would not check the minimum or maximum price before calculating the discount, which may result in an extremely low rate.

PRICE DISCOUNTING

To discount the Price of the inventory item only, in the Rate Info tab in the Rates file, select the method for Price Discount Base and set the Terms Discount Base to "NONE".

•	What do I do if I want my Categories to be priced at a specific rate instead of using cost to calculate the rate? (CATEGORY PRICING)

This is Category Pricing and this method of pricing is NOT very flexible.

In the inventory file if you want a 19" television to always rent for a set rental rate, regardless of the cost of the item you could use this method to price the inventory items using the Rates file. This would require you to have your categories broken down in a way that they could be priced separately. For example, if you had (2) two different types of 19" television sets at (2) two different rental rates, you would have to make sure there were (2) two separate categories for 19" television sets.

Let's look at how to set up the Rates file to handle this method.

Use Rates?
Ignore Min/Max?

By checking Use Rates File and by NOT checking the Ignore Min/Max field, we are telling the system that we want to use the minimum and maximum prices to limit the rental rate.

On the Price Info tab of the Rates file, determine a pricing schedule, and decide which categories are priced at this rate.

For example, if you have the price of 19.99 per month, which categories can use this price? When you add the Rate record for 19.99/mo. check all the categories that can use that price.

Set up the minimum and maximum price to be this rate and the categories that you check will ONLY be available for rent at the rate you specify. This allows the system to control the amount inventory items are being rented for, with NO ROOM for change. If you assign this rate record to a 19" television category, this would FORCE any inventory item in the 19" television category to be rented for 19.99 per month, regardless of the cost of the inventory item or any additional options this inventory item may include.

•	What do I set up if I want the cost to determine the rental rate? (COST PRICING)

This is Cost Pricing and this method of pricing is VERY flexible.

In the Inventory file if you want the items to be multiplied times a particular number of turns and then divided by a certain number of rental periods this is the pricing method for you to use.

Use Rates?
Ignore Min/Max?

With the TURNS field set to 1.50, the cost of the inventory item is multiplied by "1.5" and then divided by the number of periods chosen for the payment method to arrive at the rental rate. For example, if this 19" television cost $249.00 and the turns are set to 1.50 the amount of calculated income would be $373.50, if you divided that by 18 months the monthly rental rate for a 18 month agreement would be $20.75 per month.

•	What do I set up if I want to limit the low end of the calculated rate? (USING MIN/MAX TO CONTROL PRICING)

This is Using Min/Max to Control Pricing and this method of pricing is somewhat flexible.

In the Inventory file you may have items that you do not want to fall below a certain rental rate. For example, if you received a special promotional price from a vendor on a shipment of 19" televisions, you may want to keep the savings for yourself. In that way, you could set the minimum price to be that rental rate so that even if the inventory item had a lower cost it would never rent for less than the minimum price.

Use Rates?

Ignore Min/Max?

By NOT checking the Ignore Min/Max field you are telling the system to use the minimum and maximum prices to limit the rental rates.

MINIMUM

Let's use the 46" television example. If a 46" television costs $2,249.00, the 18 month calculated rental rate using the 1.50 turns listed here, would be $187.42. If this was the normal rental rate, $187.42 that would be fine. But if you got a shipment of 46" televisions and the cost of each television was only $1,189.00 each this would change the rental rate dramatically, if the rate was based on the cost. Now the rental rate on an 18 month agreement would only be $99.08 per month.

By setting the Min Price for Monthly to 187.42, the calculated rental rate cannot be lower than $187.42, even if the cost times the turns divided by the number of periods is less than this amount. The system still makes the calculation, but then checks the Min Price field to make sure the rental rate is not lower than this field.

In this way, if the inventory item cost less than normal you would still collect at least $187.42 per month, however if the cost of the inventory item was higher than normal, the rental rate would be slightly higher based on the cost.

MAXIMUM

Maximum price control is used more when you want to set the amount of the rental rate, and not when you want to calculate it based on the cost. For more information about limiting the Max Price see, Category Pricing.

•	What do I set up if I want each Department to be priced at the same rate? (DEPARTMENT PRICING)

This is Department Pricing and this method of pricing is VERY flexible.

In Inventory if you want all the inventory items in a particular department to be priced based on the same number of turns and other settings, you can choose an entire department and all the categories associated with that department are automatically selected.

Use Rates?

By checking Use Rates File, you are able to price the inventory in a particular department by automatically multiplying the cost times a number of turns.

If, for example, all the "APPLIANCES" in your store had 2.5 turns, you could set the turns to be 2.50 and choose only the "APPLIANCES" department to add records. This would apply all the selections from the other tabs to all of the categories associated with the "APPLIANCES" department.