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Imagine going out to a restaurant, enjoying a great dinner, and asking for the check when you’ve finished eating. You receive your bill and all it says on it is that you owe $100 for the dinner, with no other details. Most people might be taken aback; where’s the breakdown that says their veal scallopini cost $25, their date’s chicken marsala cost $15, the bottle of wine they split cost $50 and the tax on the meal cost $10? Without this type of itemized setup on the specific cost of every individual item you ordered, how would you know if you’re paying the right amount for each product?

You wouldn’t. And therein lies the beauty and value of using product line items in Salesforce.

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What are product line items?

First, a disclaimer: smaller companies that are selling only one or two unique products don’t have to worry about product line items in Salesforce. Their comparatively simple sales operations and needs don’t require the additional complexity that product line items bring, as they might not have to answer difficult questions. These companies can use custom fields in Salesforce to simplify things.

But what if your company – such as those in the software-as-a-service industry – DOES have to answer those difficult questions? What if they have to figure out what the revenue churn is for a particular segment? Do they know what their expected monthly recurring revenue (MRR) is on deals coming in? What does their scheduled revenue forecast look like for the upcoming quarter? To answer these difficult questions, and many more that arise on a regular basis, you’ll need to have product line items set up in Salesforce.

Product line items in Salesforce refers specifically to what you sell – taking into account quantity, product and price – and when you deliver them.  Businesses selling large quantities of various different items with complex schedules of delivery – either with revenue or with the item itself – need to track this information. If, a year after the sale, a sales manager wants to look back and ask what was sold, how much of it and to whom, setting up product line items in Salesforce will be a tremendous asset.

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Why you (might) need product line items in Salesforce

Many industries with scheduled payments or scheduled delivery need product-line items from a cash-flow planning perspective. For instance, a magazine subscription charges an upfront lump sum payment, followed by subsequent monthly deliveries of the item in question, namely issues of the magazine. The magazine company has to collect this money paid upfront and then appropriately plan for and schedule the actual delivery of the item, while keeping in mind that each “item sold” each month in the form of a new issue delivered will not bring in any actual revenue; that money has already been received.

Seasonal industries also have to take careful note of product line items, in terms of scheduled revenues. Take the carnival toys industry, which peaks in the summer and fall when fairs and carnivals abound aplenty. Such a company knows that they’re going to need a lot of stuffed giraffes and elephants by the time May rolls around and wants to be able to accurately forecast that demand. This means that they’ll have to order and pay for the toys in January, before shipping them to the various fairs throughout the summer. How many elephants is this fair in New York requesting? How many giraffes does the carnival in California need? Will they be paying for the toys upfront or stretching the payments out throughout the summer? Without product line items in Salesforce, it would be difficult for this company to make sure that the proper quantities of the appropriate items are reaching the right people, that they can afford to buy the toys in the first place, and that revenues are scheduled out incrementally to sustain them through the lean winter months.

Product line items and their analyses, while critical to certain companies in certain industries, is nigh impossible to execute through Salesforce reports alone. Analysis of product line items can be done by exporting the data to Excel, but that is no stroll in the park either. Yet, as integral as they are to certain sales operations, companies need to find a way to properly analyze their product line items in Salesforce and answer their difficult questions – such as by using InsightSquared.

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