Pricing Procedure In SAP MM

Pricing

• 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

- Quotations

- 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.

o Gross price:

? It is the basic price of the material w/o discounts, surcharges and taxes

Gross price = Basic Price of the Material

o Net Price:

? The Gross price after considering duties & taxes into account.

Net Price = Gross Price + Duties + Taxes

o Effective price:

? The net price after considering surcharge and discount

Effective price = Net price + surcharges + discounts

Condition Technique

• The Condition Technique is used to determine the purchase price by systematic consideration of all the relevant pricing elements

• This is the technique for 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

Access 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 this functions.

• Normally we use the existing ones without any risk.

• But some cases, we have to create a New Condition Types as per the organization requirement.

Condition-Techniq

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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 Record

• It represents that actual condition value and is stored in a condition key.

Field Description                                Field name

Material no.                                               MATNR

Vendor                                                        LIFNR

Purchase Org.                                            EKORG

Plant                                                            WERKS

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.

E.g.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 part.

• 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

Plant                        WERKS                komp

Purch.Info Re        ESOKZ                  komp

Note:

1. Each condition type has same control data

2. Control data for condition type:

3 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

 Rs.                                      Condition Types

Gross Price                                                                           100.00                                              PB00

Discount on Gross Price (@5%):                                      5.00                                                  RA01

------------

Gross Price after Discount                                                  95.00

Excise duty @ 10% on GP after                                                                                                    ED00

Discount                                                                                  9.50

------------

Sub Total                                                                                 104.50

Sales Tax @ 10% on sub total                                             10.45                                                ST00

Freight 20% on GP                                                                20.00                                               FRA1

Packing 2% on GP                                                                    2.00                                               PK00

-----------

Total Price                                                                                 136.95

• A framework of steps used to calculate or determine costs, prices, period end rebates and taxes.

o Ex. RA01 - Discount % is calculated on PB00 - Gross Price.

o It means RA01 is based on PB00 like that we have to define in the Pricing Schema

o Here PB00 has the Access Sequence - 0002. But RA01 does not have the Access Sequence. Why because it is a dependent     on PB00. But both are Condition Types.

IMG settings

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.