Pricing Concept in SAP SD by Venkat Mannam

1. Pricing Concept in SAP SD
 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
Introduction

2. Pricing Concept in SAP SD
Pricing Elements 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.
•The price of a material is represented by one condition type (PR00). However, the
price of a material can be based on different kinds of pricing records. The price can
come from a price list; it can be specific to a particular customer, or it may be a simple
material price.
•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
Elements in
Sales Order
1. Prices
2. Surcharges &
Discounts
3. Freight
4. Sales Taxes

3. Pricing Concept in SAP SD
Prices
Material Price
• A price or a pricing scale for a specific material
• A combination of sales organization and distribution channel for which the
material price is valid based on the access sequence defined in the
configuration
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
Elements:
1. Prices
2. Surcharges &
Discounts
3. Freight
4. Sales Taxes

4. Pricing Concept in SAP SD
Discounts & Surcharges
•Discounts and Surcharges are based on the Base Price, Quantity or Percentage of the
base price defined condition category
•These are applied with individual pricing conditions and associated condition records
•Pricing scales can be defined based on the Order item Quantity or amount
For example, see the below conditions provided by standard SAP
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
Elements:
1. Prices
2. Surcharges &
Discounts
3. Freight
4. Sales Taxes

5. Pricing Concept in SAP SD
Sales Taxes
•Automatic calculation of sales taxes, the system takes the following factors into
account:
•Whether the business being transacted is domestic or foreign
•The tax classification of the customer's ship-to party.(Customers who are non-profit
organizations, for example, may be exempt from paying sales tax.)
•The tax classification of the material.(Some products may not be taxed at all 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
Elements:
1. Prices
2. Surcharges &
Discounts
3. Freight
4. Sales Taxes

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

7. Pricing Concept in SAP SD
Elements of
Condition
technique
1. Introduction
2. Condition Tables
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination
Condition Tables
•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.
•Deciding the Sequence of Fields
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

8. Pricing Concept in SAP SD
Access Sequences
•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.
Though all the access sequences configured, only determined upon setting up the
condition records
Elements of
Condition
technique
1. Introduction
2. Condition Tables
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination

9. Pricing Concept in SAP SD
Condition Types
•A condition type is a representation of pricing activities such as price, discount or
surcharge, Freight and taxes. Each category may have multiple pricing conditions
•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.
Elements of
Condition
technique
1. Introduction
2. Condition Tables
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination

10. Pricing Concept in SAP SD
Pricing Procedures
•The Pricing Procedure define all the condition types in a particular sequence with logical
grouping which resembles the organizational business needs. For example the step
sequence 0-100 ranges for Prices, 200-300 ranges for Discounts
•The counter define the sequence of condition type with in the step (Logical Group)
•The Condition type defined in the Pricing procedure can displayed from the configuration
•Manual – Indicator defines if a condition type can be applied manually in the pricing
procedure
•Mandatory – The Pricing condition can be handle automatically by setting up condition
records and can’t applied manually
•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
Elements of
Condition
technique
1. Introduction
2. Condition Tables
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination

11. Pricing Concept in SAP SD
Pricing Procedure Determination
•The Unique pricing procedure is determined based on following criteria
Sales Area / Customer Pricing Procedure Indicator (Customer Master) /
Document Pricing Procedure Indicator from Sales Document Types (Sales order
and Billing Document ) in configuration
The above pricing procedure is satisfying the requirements of different documents
1 – Basis/Future pricing,
5 – Returns
A – Standard
T – Toll
Elements of
Condition
technique
1. Introduction
2. Condition Tables
3. Access Sequences
4. Condition Types
5. Pricing Procedures
6. Pricing Procedure
determination