Free goods is a type of quantity discount where additional goods are provided at no extra charge when a certain purchase quantity is met. Free goods can be configured manually by specifying free item categories, or automatically where the system proposes free goods that are either exclusive, meaning the free goods quantity is excluded from the total, or inclusive, where it is included. Multiple steps must be taken to set up and activate free goods determination including creating condition tables, defining condition types, procedures, and records to control how free items are granted and priced.

1. Free Goods

2. Free goods is a kind of quantity discount, and is granted in the form of a
goods delivery that is free of charge when a certain quantity is
purchased. You can use it to encourage your customers to order greater
quantities.
Free Goods
Free goods can be configured by two methods.
(1) Manually
(2) Automatically
Manually:
By specifying higher level item category for a line item we can determine free
goods as a free of charge items during sales order processing.
Automatically:
System proposes free of goods automatically in the sales order. In automatic free
goods configuration system follows two methods.
(1) Exclusive
(2) Inclusive

3. Exclusive: -
System configures free goods in exclusive option like free goods quantity is going to
be excluded in order quantity. Ex: For 10 items 1 item is free. Then system
configures free goods as 10 + 1. The customer pays for the goods ordered and
receives some additional goods. This is known as exclusive free goods and means
that free goods is granted for an additional quantity to that in the purchase order.
More is delivered than was ordered and the additional quantity is not billed. The
goods delivered as free do not have to be the same as the material ordered
Eg:- A brush is given free on the purchase of toothpaste.

4. Inclusive:
System configures free goods in inclusive option like free goods quantity is going to
be included in order quantity. Ex: For 10 items 1 item is free. Then system
configures free goods as 9 + 1.
Eg: - 30% extra paste is given on the purchase of a toothpaste OR e.g.:- of the ten
bottles of wine ordered two are designated as free goods. If we order ten bottles
of wine then ten bottles of wines are delivered to us as ordered but we are billed
only for the eight bottles and two bottles are given as free. We have received
inclusive free goods.

5. Free goods determination is also based on condition technique, as shown in the
below images.
1) CREATE CONDITION TABLE (V/N2)
Chose the key fields for which you want to maintain condition
records as shown below & generate the table.

6. 2) MAINTAIN ACCESS SEQUENCE (V/N1)
Go to new entries & define your own access sequence. Select the access
sequence defined & double click on access as shown below.
Go to new entries & give specify your table number created in the first step.
Save & exit.
Select the line & double click on field's icon & say enter - enter & save

7. 3) DEFINE CONDITION TYPE (V/N4)
Go to new entries & define your condition type & assign your access sequence
defined in the previous step, as shown below

8. 4) DEFINE FREE GOODS PROCEDURE (V/N5)
Go to new entries & define your own free goods procedure. Select the procedure &
Click on control data icon. Enter step, counter & the condition type defined in the
previous step as shown below.
Save & exit.

9. 5) ACTIVATE FREE GOOD DETERMINATION PROCEDURE (V/N6)
Go to new entries & assign your free good procedure defined in the
previous step to your sales area, customer pricing procedure & document
pricing procedure.
Note: - The standard document pricing procedure for free goods is "C". So
go to you sales document type & assign "C" in the document pricing
procedure field using "VOV8".
6) MAINTAIN FREE GOODS CONDITION RECORD (VBN1)
Select your defined condition type from the option button & Enter.

10. Enter the material to be given free, the minimum order quantity to be eligible
for free goods, from how much quantity the free goods are applicable( strictly
speaking the mini quantity & The from column should be same), unit, how
many free goods you want to give and whether the free good is inclusive or
exclusive, as shown below.
Note: - For exclusive, directly click on the exclusive icon as soon as you
enter the initial screen shown below.
Save & exit.
EXCLUSIVE
INDICATOR)

11. Pricing in free goods:
The pricing procedure for the free goods should contain the condition
type "R100" which is the free goods condition type. This condition type in the
pricing procedure has requirement as "55" and base type "28".
"55" means, if the item is Free Goods then only value of "R100" to be used in
Calculation. Value = Controlled by ALT Condition Base Value 28 which states
that discount should be 100%.
Path for pricing: Img -> Sales and Distribution -> Basic Function -> Free Goods ->
Condition Technique For Free Goods -> Maintain Pricing Procedure

12. IMPORTANT PRE-REQUISITES TO BE REMEMBERED
Make sure in your pricing procedure you have the condition type"r100". the
requirement should be "55" and condition base value as "28" shown below.

13. SOME OF THE IMPORTANT FIELDS ON SCREEN (FREE GOODS INCLUSIVE).
Min qty: This is the minimum Quantity which should be ordered so that the
order is eligible for free goods.
From: Give the quantity after which the free goods will be given.
Are free goods: This number shows the number of quantity which should be
given as free goods to the customer
e.g.:- let us assume min qty is maintained as 1000 and from value is 1000 and
are free goods value is 10.
If the customer places the order for 1200, since the ordered qty is more than the min qty
(1000) the customer will get 10 qty as free for every 1000 qty. i.e. the customer will
receive 120 qty as free and is billed only for 1080 qty.

14. Calculation rule: This Rule Tell that on what basis the amount of free goods
which are to be given to the customer. The Calculation Rule can be any of the
following
1. Proportional
2. Unit Reference
3. Whole Unit
1 = Pro – Rata (Proportionate): Ex: If the customer places order for 100 cases of
material “X”, then customer receives 20 cases of same material as free. That
means, the business can say that buy 100 and get 20. If the customer orders
for 162 cases, then system automatically grants 32 cases as a free of cost
(162x20/100 = 32 Cases).

15. 2 = Unit of reference: When customer orders for 100 cases of material “X”,
then the customer receives an additional 20 cases as a free of goods. That
means business can say that buy 100 get 20 free by granting 20 free for every
full of 100 cases. The customer places order for 162, then system automatically
grants only 20 cases (100x20/100=20).
3 = Whole unit: When a customer places order for 100 cases of material “X”,
then the customer receives additional 20 cases of material “X” as a free of
goods item. The business can say that buy 100 and get 20 free of charge items.
If the customer orders for increment of 100 that means 200 (100 + 100) items,
then he gets 40. If he placed the order for 101 – 199 items he gets only ZERO.

16. Free Goods Category: This tells that whether the free goods are Inclusive or
Exclusive
Free Goods Delivery Control: This Controls the delivery of free Goods. This tells
that whether the free goods are delivered in conjunction with the main Item or are
delivered alone.
If we want to the inclusive free goods to be displayed without new item generation
in the sales order then select 3 in the free goods category. In free goods master
data maintenance, this new free goods type is dealt with in the same way as the
inclusive free goods procedure except that in sale order no sub item is created.
Condition type NRAB is included in the pricing procedure to provide 100% Discount
for Inclusive free goods without item generation of having condition base value 29
and requirement 59. In the exclusive free goods determination only one field
differs from the Inclusive free Goods Determination and that is additional material
free goods

17. Additional Material for free Goods: It is the material which is different from the
original material and is given as a free good
E.g. A customer buys 100 books and gets a pencil box free.

18. Process

19. RAISE THE SALES ORDER"VA01".
The moment you enter the material along with quantity, the system automatically
displays the free goods along with it in below line items. The item category for the
main item is "TAN" whereas the item which is given free will be "TANN".

20. Now if you go & check at conditions, both the items will be priced. Go to condition
tab page of the item given as free & you will notice that the net price is zero. The
reason behind the zero net prices is because of the condition type "R100" 100 %
discount, which nullifies the price condition type. So the net price is zero, as shown
below.
R100
(Net value zero)

21. In this activity, you create the delivery and posting the PGI
Delivery Processing

22. Billing
In this activity you handle the billing.