SAP MM Pricing Procedure
This component is to store the pricing stipulations agreed with the Vendor (like discounts, surcharges or payment of freight etc) in the system.
You can enter these conditions in
- Outline Agreements (Contracts and Schedule Agreements)
- Purchase Info Records
The system applies the conditions in determining the price in Purchase Order
Note: You can enter further conditions in the PO itself.
There are three kinds of prices in purchasing.
- Gross price: It is the basic price of the material w/o discounts, surcharges, and taxes Gross price = Basic Price of the Material
- Net Price: The Gross price after considering duties & taxes into account. Net Price = Gross Price + Duties + Taxes
- Effective price: The net price after considering surcharge and discount Effective price = Net price + surcharges + discounts
The Condition Technique is used to determine the purchase price by a systematic consideration of all the relevant pricing elements
This is the technique for the formulation of rules and requirements.
The system arrives at a suggested price by applying conditions defined by means of Condition technique.
The Condition Technique is how the price determined?
The Condition Technique is used for
- Pricing for price determination
- Tax Determination
- For automatic account determination
Sequence access a Condition Record of a Condition Type in a Condition Table is a Condition Technique. This is a simple logic
Here the Condition Type is very important like PB00, PBXX, and RA01, etc. In the background every Condition Type has its own definition means the purpose of the Condition Type like, is it for Pricing or Percentage, Quantity base, Accrual Fields, etc is to be defined to work these functions.
Normally we use the existing ones without any risk.
But in some cases, we have to create a New Condition Types as per the organization requirement.
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Elements in price determination
The Important elements in price determinations are:
- Access Sequence
- Condition Required
- Condition Record
- Condition Table
- Calculation Schema
1. Access Sequence: An access sequence is a search strategy and it searches for a valid condition record in a sequence. It checks where prices are stored and at what condition prices are to be picked up. If Contract or Schedule Agreement exists, what price has to be picked-up
2. Condition Required: It represents that actual condition value and is stored in a condition key.
Field Description Field name
Material no. MATNR
Purchase Org. EKORG
Purchase Info Record ESOKZ
3. Condition Record: Condition types represent price/elements factors in the system
E.g.: Discounts in the Gross, Discounts on Net, Freight, Insurance, custom Duties, and Taxes.
Note: Via Condition type, you specify how the price factor is calculated.
PB00 - Standard Gross (Basic) Price (Automatic)
PBXX - Standard Gross (Basic) Price (Manual)
FRA1 - Delivery Costs
NAVS - Non-Deduct able Input Tax
SKTO - Cash Discount
4. Condition Table: A Condition Table consists of one or more condition keys and data parts.
Data Part contains a number that references a record in another table (which contains the condition records)
Field Catalog: Grouping of certain fields for determining prices
Material MATNR komp
Vendor LIFNR komk p - item field in komp & komk
Purch. Org EKORG komk k - header field in komp & komk
Purch.Info Re WERKS komp
Plant ESOKZ komp
- Each condition type has the same control data
- Control data for condition type
- All condition types have the same screens. In that field, values may be different.
5. Calculation Schema: The Pricing Schema means the calculations procedure of Condition Type.
The standard Calculation schema provided by SAP for Purchasing is RM0000
In General, the Pricing structure or break up provided by vendors is under the following format
Particulars Rs. Condition Types
Gross Price (@5%):--------------------100.00 PB00
Discount on Gross Price----------------5.00 RA01
Gross Price after Discount--------------95.00
Excise duty @ 10% on GP after ED00
Sales Tax @ 10% on subtotal-----------10.45 ST00
Freight 20% on GP----------------------20.00 FRA1
Packing 2% on GP-----------------------2.00 PK00
A framework of steps used to calculate or determine costs, prices, period end rebates, and taxes.
Ex. RA01 - Discount % is calculated on PB00 - Gross Price.
It means RA01 is based on PB00 like that we have to define in the Pricing Schema
Here PB00 has the Access Sequence - 0002. But RA01 does not have the Access Sequence. Why because it is dependent on PB00. But both are Condition Types.
Define Price Determination Process Define Access Sequences Define Condition Types Define Calculation Schema Define Schema Group
- Schema Groups: Vendor
- Schema Groups for Purchasing Organizations
- Assignment of Schema Group to Purchasing Organization
Define Schema Determination: Determine Calculation Schema for Standard Purchase Orders.
After completion of the Schema Group, we have to assign it to Vendors. Then whenever we use any transaction with this Vendor, the concerned Schema will work as configured by us.
The Pricing in MM is vast because each Condition has its own importance and each Access Sequence has its own importance. So you need not bother about this. First, you learn how to define the Calculation Schema through the above.