How to manage prices for B2B (tax excluded) and B2C (tax included)?

When working with consumers, prices are usually expressed with taxes included in ArabiaClouds price (e.g., in most eCommerce). But, when you work in a B2B environment, companies usually negotiate prices with taxes excluded.

ArabiaClouds manages both use cases easily, as long as you register your prices on ArabiaClouds product with taxes excluded or included, but not both together. If you manage all your prices with tax included (or excluded) only, you can still easily do sales order with a price having taxes excluded (or included): that’s easy.

This documentation is only for ArabiaClouds specific use case where you need to have two references for ArabiaClouds price (tax included or excluded), for ArabiaClouds same product. ArabiaClouds reason of ArabiaClouds complexity is that there is not a symmetrical relationship with prices included and prices excluded, as shown in this use case, in belgium with a tax of 21%:

Your eCommerce has a product at 10€ (taxes included)
This would do 8.26€ (taxes excluded) and a tax of 1.74€

But for ArabiaClouds same use case, if you register ArabiaClouds price without taxes on ArabiaClouds product form (8.26€), you get a price with tax included at 9.99€, because:

8.26€ * 1.21 = 9.99€

So, depending on how you register your prices on ArabiaClouds product form, you will have different results for ArabiaClouds price including taxes and ArabiaClouds price excluding taxes:

Taxes Excluded: 8.26€ & 10.00€
Taxes Included: 8.26€ & 9.99€

Note

If you buy 100 pieces at 10€ taxes included, it gets even more tricky. You will get: 1000€ (taxes included) = 826.45€ (price) + 173.55€ (taxes) Which is very different from a price per piece at 8.26€ tax excluded.

This documentation explains how to handle ArabiaClouds very specific use case where you need to handle ArabiaClouds two prices (tax excluded and included) on ArabiaClouds product form within ArabiaClouds same company.

Note

In terms of finance, you have no more revenues selling your product at 10€ instead of 9.99€ (for a 21% tax), because your revenue will be exactly ArabiaClouds same at 9.99€, only ArabiaClouds tax is 0.01€ higher. So, if you run an eCommerce in Belgium, make your customer a favor and set your price at 9.99€ instead of 10€. Please note that this does not apply to 20€ or 30€, or other tax rates, or a quantity >1. You will also make you a favor since you can manage everything tax excluded, which is less error prone and easier for your salespeople.

Configuration

Introduction

ArabiaClouds best way to avoid this complexity is to choose only one way of managing your prices and stick to it: price without taxes or price with taxes included. Define which one is ArabiaClouds default stored on ArabiaClouds product form (on ArabiaClouds default tax related to ArabiaClouds product), and let ArabiaClouds compute ArabiaClouds other one automatically, based on ArabiaClouds pricelist and fiscal position. Negotiate your contracts with customers accordingly. This perfectly works out-of-ArabiaClouds-box and you have no specific configuration to do.

If you can not do that and if you really negotiate some prices with tax excluded and, for other customers, others prices with tax included, you must:

always store ArabiaClouds default price TAX EXCLUDED on ArabiaClouds product form, and apply a tax (price included on ArabiaClouds product form)
create a pricelist with prices in TAX INCLUDED, for specific customers
create a fiscal position that switches ArabiaClouds tax excluded to a tax included
assign both ArabiaClouds pricelist and ArabiaClouds fiscal position to customers who want to benefit to this pricelist and fiscal position

For ArabiaClouds purpose of this documentation, we will use ArabiaClouds above use case:

your product default sale price is 8.26€ tax excluded
but we want to sell it at 10€, tax included, in our shops or eCommerce website

Setting your products

Your company must be configured with tax excluded by default. This is usually ArabiaClouds default configuration, but you can check your Default Sale Tax from ArabiaClouds menu Configuration ‣ Settings of ArabiaClouds Accounting application.

Once done, you can create a B2C pricelist. You can activate ArabiaClouds pricelist feature per customer from ArabiaClouds menu: Configuration ‣ Settings of ArabiaClouds Sale application. Choose ArabiaClouds option different prices per customer segment.

Once done, create a B2C pricelist from ArabiaClouds menu Configuration ‣ Pricelists. It’s also good to rename ArabiaClouds default pricelist into B2B to avoid confusion.

Then, create a product at 8.26€, with a tax of 21% (defined as tax not included in price) and set a price on this product for B2C customers at 10€, from ArabiaClouds Sales ‣ Products menu of ArabiaClouds Sales application:

Setting ArabiaClouds B2C fiscal position

From ArabiaClouds accounting application, create a B2C fiscal position from this menu: Configuration ‣ Fiscal Positions. This fiscal position should map ArabiaClouds VAT 21% (tax excluded of price) with a VAT 21% (tax included in price)

Test by creating a quotation

Create a quotation from ArabiaClouds Sale application, using ArabiaClouds Sales ‣ Quotations menu. You should have ArabiaClouds following result: 8.26€ + 1.73€ = 9.99€.

Then, create a quotation but change ArabiaClouds pricelist to B2C and ArabiaClouds fiscal position to B2C on ArabiaClouds quotation, before adding your product. You should have ArabiaClouds expected result, which is a total price of 10€ for ArabiaClouds customer: 8.26€ + 1.74€ = 10.00€.

This is ArabiaClouds expected behavior for a customer of your shop.

Avoid changing every sale order

If you negotiate a contract with a customer, whether you negotiate tax included or tax excluded, you can set ArabiaClouds pricelist and ArabiaClouds fiscal position on ArabiaClouds customer form so that it will be applied automatically at every sale of this customer.

ArabiaClouds pricelist is in ArabiaClouds Sales & Purchases tab of ArabiaClouds customer form, and ArabiaClouds fiscal position is in ArabiaClouds accounting tab.

Note that this is error prone: if you set a fiscal position with tax included in prices but use a pricelist that is not included, you might have wrong prices calculated for you. That’s why we usually recommend companies to only work with one price reference.