Overview, Configuration & FAQs on Pricing

The price is a very important function in SAP. It can also be very difficult to grasp, but the underlying concepts are fairly simple. Prices of items are determined mainly by a process called the Condition Technique. The technical situation is so called because it operates using a set of conditions or elements that work together to determine the price of an item.

In SAP, the technique is used to organize and manipulate the key elements that determine the price of the material to arrive at an overall price that includes the basic price, discounts, surcharges and taxes.

The price of a line (that is, a variable amount of material) is determined by a combination of 5 elements. They are:

1. The sale
2. The type of document
3. The sales organization
4. Division, and
5. The distribution channel

Combining these elements with the base material determines the total price and the actual price for a customer is determined based of the pricing procedure.

Maintaining Pricing Procedure

A price is determined for a material through the use of a pricing procedure, the highest level element of pricing. Each item uses a specific pricing procedure, determined by a unique combination of the five elements above. This selection is set up in the Implementation Guide (IMG). The pricing procedure defines the conditions permitted for a document and the sequence in which the system takes these conditions into account during pricing.

A standard pricing procedure is defined in the standard SAP system. It contains conditions most commonly used. These include material prices, discounts, and surcharges, such as freight, or tax. The pricing procedure is unique for the sales area, plus the document pricing procedure key A, and the customer pricing procedure key 1. The document pricing procedure key is in the header of the sales document, while the customer pricing procedure key is in the customer master record. This adds up to the five elements described previously. The field to the right of the pricing procedure is the condition type automatically proposed by the system.

To see how the pricing procedure for a transaction is made goto Tools –> AcceleratedSAP –> Customizing –>Project Management –>SAP Reference IMG –>Sales and Distribution –>Basic Functions –>Pricing –>Pricing Control –>Define and Assign Pricing Procedures –>Define Pricing Procedure Determination or use the transaction Code: OVKK.

Path in SAP IMG to maintain pricing procedure: IMG –> Sales & Distribution –> Basic Functions –> Pricing –> Pricing Control –> Define and Assign Pricing Procedure–> Maintain pricing procedures

Assign Sales Area to Pricing Procedure

From the IMG screen: Sales and Distribution -> Basic Functions -> Pricing -> Pricing Control -> Define and assign pricing procedures

Click New Entries, then enter all combinations of your slaes areas, distribution channels, and divisions. Here, RVAAUS, the standard United States pricing procedure without tax jurisdiction codes is used. If the company that is being set up has used tax jurisdiction codes, the pricing procedure RVAJUS would be used instead. Remember to enter a pricing procedure for each distribution channel within each sales organization. If this is not done now, it will have to be done eventually for the system to be able to process the flow of customer orders, deliveries, and payments correctly from each of its sales organizations.

 

Pricing in Delivery

Pricing is an intrinsic part of Sales & Distribution. System has provided extensive features to map various pricing scenarios in business environment. ‘Pricing’ term is used to explain the calculation of prices for customers or vendors and costs for internal purposes. ‘Conditions’ are extensively used in pricing. These represent a set of circumstances that apply when a price is calculated. These are based on many variable factors like Customer, Material, Order quantity, Period etc.

Condition technique is main basis of pricing in sales. Condition Technique is a method designed in SAP which is utilized in various functionalities. In Pricing this method is used by system to determine prices. There are various elements used in condition technique, which are setup and controlled in customizing. A variety of important information like which gross price and what discounts are applicable to which customer in sales order is determined by condition technique in system. It is a universal technique, the basic elements of which remain same in different functionalities of Sales & Distribution.

Following elements are used in condition technique in pricing:

Condition Types : Condition type is representation in system of some aspect of daily pricing activities in business environment. For each kind of price in business transaction a condition type can be created in customizing. Example for Prices, Surcharge, Discount etc. Various Controls are provided in condition type definition in customizing to suit the numerous price types. System has predefined condition types for all categories of price types. These are utilized in the standard pricing procedures used for standard scenarios. Standard condition types are normally copied to new customer condition types and modified to suit specific pricing requirements in business transactions.

Condition Table: Condition table defines combination of fields that identify a condition record. Specific condition data is stored in system as condition record.

Access Sequences: Access Sequence is a search strategy used by system to find valid condition record for particular condition type. It determines the sequence in which search is conducted.
Access sequence consists of one or more accesses. This sequence establishes which condition records have priority and it tells the system where to look first, second and so on till a valid record is found.
Access sequence contains the condition tables and the standard procedure to maintain the sequence of condition table is from ‘Most Specific’ to ‘General’.

Pricing Procedures: Pricing Procedure is a group of condition types arranged in particular sequence to have correct prices being determined in a sales document.
Various controls of pricing are setup in Pricing procedure like

• Processing condition types manually
• Requirements for specific condition types
• Printing of Condition types, etc.

Standard system contains many pre-defined pricing procedures for various business scenarios. These contain frequently used condition types again pre-defined in system.

Pricing in delivery is used in cases where packaging costs need to be displayed at delivery level or in Retail where retail price (i.eprice paid by end customer) is to be displayed for each article on delivery notes. In Retail this price can also be used by pickers when price is printed on picking labels. Pricing in delivery provides additional information in identifying articles during goods receipt and goods issue.

Frequently Asked Questions on Pricing

Could you explain what condition technique in SAP is?
Hierarchy of elements defining a data combination which leads to certain actions.
In pricing the condition technique refers to the method by which the system determines prices from information stored in condition records. In Sales and Distribution, the various elements used in the condition technique are set up and controlled in Customizing. During sales order processing, the system uses the condition technique to determine a variety of important pricing information.

Name three areas/processes which use condition technique in SD?
Material determination, Output determination, Account determination.

What are the four basic elements of condition technique?
Condition Types, Condition Tables, Access Sequences, Pricing Procedures.

Please explain graphically the relationship between the four basic elements in condition techniques?
Procedures à Condition Types à Access Sequence à Condition Tables à Condition Records.

Explain what a pricing procedure is?
The primary job of a pricing procedure is to define a group of condition types in a particular sequence. The pricing procedure also determines:
– Which sub-totals appear during pricing
– To what extent pricing can be influenced manually
– Which method the system uses to calculate percentage discounts and surcharges
– which requirements for a particular condition type must be fulfilled before the system takes the condition into account.

Explain what a condition table and an access sequence is and the relationship between them?
A condition table defines the combination of fields (the key) that identifies an individual condition record. A condition record is how the system stores the specific condition data that you enter in the system as condition records. For example, when you enter the price for a product or a special discount for a good customer, you create individual condition records.
An access sequence is a search strategy that the system uses to find valid data for a particular condition type. It determines the sequence in which the system searches for data. The access sequence consists of one or more accesses. The sequence of the accesses establishes which condition records have priority over others. The accesses tell the system where to look first, second, and so on, until it finds a valid condition record. You specify an access sequence for each condition type for which you create condition records.

What is a condition type? What are the two main groups of condition types?
A condition type is a representation in the system of some aspect of your daily pricing activities. For example, you can define a different condition type for each kind of price, discount, or surcharge that occurs in your business transactions.
Fixed Amount & Percentage.

Is SD the only module that uses condition technique?
No.

What is a condition supplement and why would you use it?
A condition supplement is a supplement for a particular condition type. For example, you can include a supplement every time you apply a material price. The supplement can contain various discounts. During pricing, the system automatically applies the discounts defined in the supplement every time it accesses a material price. You define for which condition types you want to use condition supplements in Customizing for Sales.

Which partner function is relevant when it comes to tax calculation in the sales order?
Ship-to party.

Name at least three different condition types in pricing?
Price, Discounts, Freight. PROO, K007, KF00.
You can create scales for prices and discounts. Name the four possible scale basis in R/3.
Value, Quantity, Gross weight, Net weight, Volume.

Where would you specify that a condition type is a discount or a surcharge?
In Condition Type Details Screen.

If somebody adds price elements manually in the sales order or if somebody changes a discount the system determined automatically, do you have a possibility to see that in the sales order?
Yes.

You want to list all condition records for a certain material or a certain sales organization. How would you do that?
By creating Pricing Reports.

Does the pricing procedure apply for the pricing data at item level or for the pricing data at header level?
Both.

When you create a header condition manually in the sales order the system can copy the values in different ways to the items. Where would you specify how the system should process?
Condition Type.

Which data do you have to maintain in SD so that the system can determine the sales taxes in the sales order automatically?
Tax rate with or without Jurisdiction.

What does the condition exclusion indicator do for you?
The system can exclude conditions so that they are not taken into account during pricing in sales documents.

Can you explain what a statistical condition is? Give an example for a statistical condition?
VPRS.

For what do you use customer hierarchies?
Pricing , Rebate.

Can you track cumulative values in R/3? If yes, it could be based on what?
Yes. Maximum Value, Maximum Orders, Maximum Quantity.

If you want to make sure that conditions records apply for a certain time period only what would you have to do?
Validity Period to be specified in condition record.

What is a group condition?
Condition which can be used to determine a scale value based on more than one item in a document. The system groups the items using either the condition key for the appropriate condition record or a separately defined condition key.

Name the influencing factors for pricing procedure determination during sales order entry?
Customer, Sales Document Type and Sales Area.

Can you copy condition records? If yes, are there any restrictions?
Yes. Field specific.

If you create a new condition type-do you also have to create a new condition table and a new access sequence?
Yes.

Where can you specify that a condition is mandatory?
In Pricing Procedure.

Tax jurisdiction processing is a close link between which two modules?
FI & SD.

Do you have to create a condition record for taxes in the SD application?
Yes.