Brace yourself for the longest part of the NetSuite Setting up Advanced Revenue Management (ARM) series. The two major topics you will learn are how to add Item Revenue Categories and How to Set Up Fair Value.

This guide will cover the following:

And if you missed our first part of the NetSuite Setting up Advanced Revenue Management (ARM) series, you may go to enabling the advanced revenue management (ARM) Feature.

I suggest you watch the video. It’s easier to understand if you are a visual/audio learner. The content below is the same as the video. It’s for those who learn by reading.

 

Adding Item Revenue Categories

Here’s the step by step procedure.

  • Step 1: Go to Revenue → Setup → Item Revenue Categories → New.
  • Step 2: Enter a Name for the category.
     
    Use unique, descriptive names, but keep them short so they can be read in the lists.
  • Step 3: Complete the optional fields in the Item Revenue Categories List.
    • Description
    • Fair Value Formula – Your selection here becomes the default for fair value price records created for this item revenue category and for items included in this category.
    • Fair Value Range Checking Policy – This dropdown list is visible only when the Enable Fair Value Range Checking accounting preference is checked.

     
    The options available for these fields are Boundary, Fair Value, High, and Low.

  • Step 4: Click Save or Save & New.

 

Setting Up Fair Value

You can assign fair values to items and item revenue categories by setting up a fair value price list. To complete the fair value price list, you must have fair value formulas. You may also add dimensions to the fair value price list.

Below are the main steps in setting up fair value rules. Let’s go through them in detail in the next sections.

  • Adding Fair Values formula
  • Adding Fair Values Dimensions
  • Creating Fair Values Price List

 

Adding Fair Value Formulas

Fair value formulas are used in the following:

  • Fair value price list
  • Item revenue category records

You can select properly formatted fields from the Field dropdown list in the formula assistant or type them directly in the Fair Value Formula field.

The proper formats are as follows:

proper fair value formulas
Fair value formulas

Now, let’s go the steps on how to add fair value formulas.

  • Step 1: Go to Revenue → Setup → Fair Value Formula → New.
  • Step 2: Enter a Name for the formula.
     
    The name appears in list. Use unique, descriptive names, but keep them short so they can be read in the list.
  • Step 3: Enter an optional Description.
  • Step 4: Move the pointer to the right of the Fair Value Formula field to display the Set Formula icon and click the icon to open a pop-up window, where you can build the formula.
     
    You can type directly in the Fair Value Formula field.
  • Step 5: Select values from the Field and Function lists to add them to the Formula field using the proper syntax. You can type directly in the Formula field.
  • Step 6: Click Set to accept the value in the Formula field and close the window.
Screenshot of pop-up window where you can build the fair value formula
Pop-up window where you can add the field, function and the formula
  • Step 7: Edit the value in the Fair Value Formula field as needed.
  • Step 8: Click Save or Save & New.
     
    After you save the fair value formula, you can copy it to create similar formulas as needed.

 

Adding Fair Value Dimensions

  • Step 1A: If you have an Administrator role, go to Setup → Accounting → Fair Value Dimensions under the Revenue group.
     
    Step 1B: For Revenue Managers, go to Revenue → Setup → Fair Value Dimensions.
  • Step 2: Select a dimension from the Field list, and type a Description.
  • Step 3: Select additional fields and type descriptions as desired.
  • Step 4: Click Save.
Screenshot of fair value dimensions
Adding Fair Value Dimension

 

Creating Fair Value Price Lists

Before going through the step by step procedure, it is important to know the logic behind fair value price selection.

When fair value dimensions are used on a fair value price record, the values you can select include the following:

  • Any – When selected as the dimension value, the fair value price applies to all items regardless of their dimension value unless another fair value price matches the dimension exactly.
  • Unassigned – This equates to null, and when selected, the fair value price applies to items with no value selected for the dimension.

These values are in addition to specific values for the dimension.

Let’s have an example.

If you add a fair value dimension for Location and your account includes the locations Americas, EMEA, and Asia, the values for Location on the fair value price record are as follows:

  • Any
  • Unassigned
  • Americas
  • Asia
  • EMEA

You will add Location as a fair value dimension and set up three fair value price records for an item as follows:

Screenshot fair value records
Fair Value Price Records

The service item is included in various transactions with different locations. The fair value price list logic selects fair value prices for the locations as follows:

Screenshot fair value locations
Fair Value Locations

Now, you’re ready to go to the steps in creating Fair Value Price Lists.

  • Step 1: Go to Revenue → Setup → Fair Value Price Lists → New.
  • Step 2: Complete the following fields under Primary Information section.
    • Select an Item or Item Revenue Category from the lists.

      If you select an Item that belongs to a category, the Item Revenue Category field is automatically populated.

      If you select an Item Revenue Category, you can leave Item blank.

Screenshot of fair value price window
Creating Fair Value Price Lists
    • In Base Fair Value, enter the base fair value for the item. This value is used for range checking.
    • Select an option from the Currency
    • Select an option from the Fair Value Formula.
  • Step 3: Enter the following optional values as appropriate.
Screenshot of fair range checking policy
Fair Value Range Checking Policy field
    • Subsidiary – Available only on OneWorld accounts.
    • Accounting Book – Available only when the Multi-Book Accounting feature is enabled.
    • Source Type – Enables you to create fair value prices that are specific to the type of revenue source. By default, the fair value price applies to any source that matches the other criteria.
    • Customer: Project – Enables you to create fair value prices that are specific to a customer or project. By default, the fair value price applies to any customer or project that matches the other criteria.
    • Fair Value Range Checking Policy – This dropdown list and its related fields are visible only when the Enable Fair Value Range Checking accounting preference is checked as shown below.
Screenshot of enable fair value range checking
Select the check box of the Enable Fair Value Range Checking
    • When Fair Value Range Checking Policy is selected, following additional fields under Primary Information are required regardless of the option you select.
      • Low Value Percent field – The value entered sets the low end of the range.
      • High Value Percent field – This value entered sets the high end of the range.
    • Units Type – Available only when the Multiple Units of Measure feature is enabled.
    • Is VSOE Price? – Check this box to indicate that the fair value is VSOE. If this box is not checked, the fair value is considered an estimate.
    • Start Date and End Date – Enable you to set up fair value prices for future use. When a revenue arrangement is created, its date is checked against these dates.
Screenshot of VSOE checkbox, start date and end date fields
Select the VSOE checkbox, and enter the start date and the end date
    • Fair Value Dimension – When you add fair value dimensions, they appear in a Fair Value Dimension section or group below Primary Information.
       
      Each dimension list includes the Any or Unassigned values in addition to the dimension values for the account.
  • Step 4: After selection, click Save or Save & New.

 
Summary
The whole process of setting up Advanced Revenue Management is quite a lot, right? To recap what you just learned, go to the links below.

 

Also, please read our first part of the NetSuite Setting up Advanced Revenue Management (ARM) series, enabling the Advanced Revenue Management (ARM) Feature.

And If you’re ready to learn about part 3, go to Adding Revenue Allocation Groups Setting Up Advanced Revenue Management.

 

watch video in youtube

 

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