Sourcing Setup 10: Define Cost Factors and Cost Factor Lists

Cost factors allow you to identify and negotiate on additional costs related to a line. You can use cost factors to obtain a more realistic idea of the total cost of an item or service by factoring in any additional costs beyond just price. Such costs could include additional costs such as consulting or training, or internal costs such as switching costs. 

Once you create cost factors for your commonly occurring additional costs, you can create lists of cost factors. Buyers can then apply these cost factor lists to negotiations to quickly identify the secondary costs that also need to be negotiated. 

To define a cost factor: 

1. On the Negotiations Home page, click the Administration tab. 

2. Click "Cost Factors." 

3. On the Cost Factors page, click Create.

4. On the Create Cost Factor page, enter the following information:

• A unique code .
• The name of the new price factor.
• A short text description for the price factor.
• A pricing basis value to determine how this price factor is calculated. You can define: a fixed amount for the line, a fixed amount for each unit of the line, or a percentage amount of the line cost.
• The status for this price factor. Active price elements are immediately available for use. Inactive price elements cannot be used.
• Cost Management and Billing values are not used in Sourcing

5. Once you have entered your information, click Apply. The information you entered is validated. If your code is not unique, you are prompted to enter a different one.


To define a cost factor list:

1. On the Negotiations Home page, click the Administration tab.

2. Click "Reusable Cost Factor Lists."

3. On the Reusable Cost Factor Lists page, click "Create Cost Factor List."

4. On the Create Cost Factor List page, enter the following information:

• Name of the new list
• A short text description of the new list
• The status of the new list. Active lists can be used immediately. Inactive lists
• cannot be used

5. From the Price Factor drop down list, select a price factor for this list and click Add to List. Repeat as necessary to add any remaining price factors to the list.

6. When you are finished adding cost factors , click Apply.