Pricing Concept in SAP SD

Introduction  Pricing is often a complex process and it can be a challenge to organizations to

arrive at a specific price for a Customer or Vendor under different circumstances

 Pricing is considered various factors such as Surcharges, Discounts, Freights,

Promotions and Taxes before arriving at final price of the Goods or Services

 Organizations emphasize the need of automated the price determination as

effective as possible in order to prevent manual overrides and price maintenance
with in SAP ERP System
 Pricing Concept in SAP SD
Pricing Elements Pricing Elements in Sales Order
in Sales Order • When entering sales orders, the system can carry out an automatic check. During
sales order entry, the system can calculate prices automatically.
1. Prices
• The price of a material is represented by one condition type (PR00). However,
2. Surcharges & the price of a material can be based on different kinds of pricing records. The
Discounts price can come from a price list; it can be specific to a particular customer, or it
3. Freight may be a simple material price.
4. Sales Taxes • Each discount, surcharge, freight charge, and tax is defined by its own condition.
The following figure illustrates how the system represents various pricing
elements of everyday business.
 Pricing Concept in SAP SD
Pricing Prices
Elements: Material Price
1. Prices • A price or a pricing scale for a specific material
2. Surcharges & • A combination of sales organization and distribution channel for which the
material price is valid based on the access sequence defined in the
Discounts configuration
3. Freight
4. Sales Taxes Price List Type
• Create the Custom Price list type and assign the Price List type in Customer
master data. We can define price list types by customer group (Whole Sale,
Retail) and by currency (in case of Foreign customer)

Customer Specific Price

• Create customer specific prices by defining access sequence including the
customer in addition to Sales Area. Also can be achieved assigning a routine
for the condition type
 Pricing Concept in SAP SD
Pricing Discounts & Surcharges
Elements: • Discounts and Surcharges are based on the Base Price, Quantity or Percentage of
the base price defined condition category
1. Prices
• These are applied with individual pricing conditions and associated condition
2. Surcharges & records
Discounts • Pricing scales can be defined based on the Order item Quantity or amount
3. Freight For example, see the below conditions provided by standard SAP
4. Sales Taxes Price Condition Discount Key
K007 Customer (Percentage)
K005 Customer / Material (Absolute)
BO03 Customer rebate (Percentage)
Freight Charges
• Incoterms are the internationally recognized shipping terms that establish the
respective liabilities of both the shipping party and the recipient
• SAP Standard condition KF00 is used in the pricing procedure based on the
shipping conditions automatically determined by setting up condition records
• Header condition HD00 can be used for charging the freight manually
 Pricing Concept in SAP SD
Pricing Sales Taxes
Elements: • Automatic calculation of sales taxes, the system takes the following factors into
account:
1. Prices
• Whether the business being transacted is domestic or foreign
2. Surcharges &
• The tax classification of the customer's ship-to party.(Customers who are non-
Discounts profit organizations, for example, may be exempt from paying sales tax.)
3. Freight • The tax classification of the material.(Some products may not be taxed at all
4. Sales Taxes while others may have a reduced tax rate.)
• Taxes is also a condition type in SAP as MWST (Europe) and UTXJ (US)
• Material Tax Classification
• You specify the tax classification for a material in the material master record.
• During sales order processing, the system automatically transfers the tax
classification into the sales document by Material Tax Classification (Material
Master) and Customer Tax classification ( Customer Master)
 Pricing Concept in SAP SD

Elements of Pricing Condition Technique

Condition Introduction:
technique Condition Table
1. Introduction
2. Condition Tables Condition Technique Access Sequence Pricing determination on a
3. Access Sequences Configuration Condition Type SD Document
4. Condition Types
5. Pricing Procedures Pricing Procedure
6. Pricing Procedure
determination
Sales Area Customer SD Document

Flow of Condition Technique

• Define condition types for each of the price elements (prices, discounts, and
surcharges) that occur in business transactions.
• Define the condition tables that enable you to store and retrieve condition
records for each of the different condition types.
• Define the access sequences that enable the system to find valid condition
records.
• Group condition types and establish their sequence in pricing procedures.
 Pricing Concept in SAP SD
Elements of Condition Tables
Condition • A condition table defines the combination of fields (the key) that identifies an
technique individual condition record. A condition record is how the system stores the
1. Introduction specific condition data that you enter in the system as condition records.
2. Condition Tables • Deciding the Sequence of Fields
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination

Deciding the sequence of the fields

• The order of the fields in a condition table affects the performance of the system
during pricing. The sequence should be Organizational data, Sales document
header data followed by Item data
 Pricing Concept in SAP SD
Elements of Access Sequences
Condition • An access sequence is a search strategy that the system uses to find valid data for
technique a particular condition type.
1. Introduction • It determines the sequence in which the system searches for data. The access
sequence consists of one or more accesses.
2. Condition Tables
• The sequence of the accesses establishes which condition records have priority
3. Access Sequences
over others.
4. Condition Types
• The accesses tell the system where to look first, second, and so on, until it finds a
5. Pricing Procedures
valid condition record. You specify an access sequence for each condition type
6. Pricing Procedure for which you create condition records.
determination

Though all the access sequences configured, only determined upon setting up the
condition records
 Pricing Concept in SAP SD
Elements of Condition Types
Condition • A condition type is a representation of pricing activities such as price, discount or
technique surcharge, Freight and taxes. Each category may have multiple pricing conditions
1. Introduction
2. Condition Tables
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination

• In the above scenario, two discounts can apply. The first discount is a percentage
discount based on the quantity ordered, second discount is a fixed discount
based on the total weight of the item.
• While configuring the condition, we can define the calculation type which
determines how the system calculates prices, discounts and surcharges for a
condition.
• When setting up condition records, you can enter a different calculation type
than the one in Customizing. At present all available calculation types are
permitted.
• If you use different calculation types for the same conditions (for example,
percentage, as a fixed amount or quantity-dependent), need not to define
different condition types in Customizing and can set a different calculation type
when maintaining the individual condition records.
 Pricing Concept in SAP SD
Elements of Pricing Procedures
Condition • The Pricing Procedure define all the condition types in a particular sequence with
logical grouping which resembles the organizational business needs. For example the
technique step sequence 0-100 ranges for Prices, 200-300 ranges for Discounts
1. Introduction • The counter define the sequence of condition type with in the step (Logical Group)
2. Condition Tables • The Condition type defined in the Pricing procedure can displayed from the
configuration
3. Access Sequences
• Manual – Indicator defines if a condition type can be applied manually in the pricing
4. Condition Types procedure
5. Pricing Procedures • Mandatory – The Pricing condition can be handle automatically by setting up condition
6. Pricing Procedure records and can’t applied manually
determination • Statistical – This condition will not be added to net price (Ex: Accrual Conditions)
• Print – If this field is blank, can’t Print in Output documents such as Invoice etc
• Subtot – It allows to store the value of subtotal of logical group of conditions defined
in subtotals
• Req – Requirement controls the condition if and when the condition taken into account
of calculation of net value. For example condition is valid in Billing etc
• Cal Typ - This allowed you assign a piece of code that condition can behave differently
than standard
• Base Type – Allows to assign piece of code to set the condition calculation basis to
something different than standard
• Acckey – Used in account determination to post the value of a condition type to the
appropriated G/L Account
• Accruals – Used in account determination to post the value of an accrual condition
type to the appropriate accrual accounts
 Pricing Concept in SAP SD
Elements of Pricing Procedure Determination
Condition • The Unique pricing procedure is determined based on following criteria
technique Sales Area / Customer Pricing Procedure Indicator (Customer Master) /
1. Introduction Document Pricing Procedure Indicator from Sales Document Types (Sales order
2. Condition Tables and Billing Document ) in configuration
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination

The above pricing procedure is satisfying the requirements of different documents

1 – Basis/Future pricing,
5 – Returns
A – Standard
T – Toll