Configuration Tips for Using Automated Flexible Product Prices with SAP Pricing Scale

  • by Patrick Imhen, Business Analyst and Senior SAP MM/SD/PM Functional Consultant, ZOCODE Limited
  • August 31, 2017
Learn how to gain market share by configuring and implementing SAP pricing scale with different automated flexible price strategies and appropriate business scenarios.
Learning Objectives

By reading this article, you will learn:

  • How SAP pricing scale can help organizations achieve a fit-to-customer price technique to sustain an agile business model
  • How to configure and set up different price scale types with applicable business scenarios using the sales order document in SAP sales and distribution (SD)
  • How to use a group condition routine to apply price scales to categorized products
Key Concept
Organizations have requirements to implement automated scalable price models that can enable them to respond competitively to their customers and prospective customers’ purchasing power. SAP has provided some functionalities such as pricing scale that can enable organizations to achieve automated flexibility with their price models. Pricing scale is a functionality within SAP sales and distribution (SD) and the material management (MM) price condition.

One vital factor that drives business success is the ability for organizations to adopt price strategies that are scalable to compete in sustaining their customers and attracting new customers, thereby increasing their market shares. It is an effective way to keep a consistent inflow of revenue.

Price scaling in SAP sales and distribution (SD) is a functionality within the pricing condition types. It is a vital functionality that should be implemented by every organization that desires to stay competitive and responsive to market forces. With pricing scale functionality, organizations can, for instance, sell a particular product to different customers at different prices. They can also sell a product to the same customer at different prices under different sales conditions, by which the prices can be determined automatically without a user’s manual input.

I explain how I have implemented different price scales to fulfill different client business requirements using business scenarios. I focus on the SAP SD price condition types; nevertheless, the knowledge gained here can be applicable to SAP material management (MM) price condition types.

Achieve a Fit-to-Customer Price Technique to Sustain an Agile Business Model

The fit-to-customer price technique is a defined flexible price model concept used by organizations to set their product prices to fit their customers based on certain categorizations or business conditions. This categorization could be for a particular customer, or it could be by such criteria as customer segments, location, or economic situation. For such organizations, prices for their products are usually very flexible; they don’t just end their sales activity by selling to their customers, but they keep a further study on their customers’ business situation from time to time to know when and how to encourage them to buy more of their products using favorable prices.

The fit-to-customer price technique helps an organization to become very responsive to its customers and helps it to swiftly take advantage of opportunities for selling more products in quantity and variety to their customers. Nevertheless, there are certain challenges that organizations face when doing this manually. Some of these challenges are compliance, consistency, control, and time.

With SAP pricing scale, organizations running SAP applications can achieve this automated flexibility of their product prices to effectively execute the fit-to-customer price technique. It eliminates the challenge of compliance because there is no user input. The price is consistent because it is automated and the time taken to retrieve appropriate prices is eliminated.

Applying SAP pricing scale, organizations automate different prices for a customer or group of customers on a product with different conditions. This may be in the form of a discount based on certain quantities. For example, a company that manufactures phones in China and has several customers from around Asia, Europe, and Africa observed that due to the penetration of the Internet in Africa, the demand for smart phones is increasing. It decided to give certain discounts for different quantities of the phones purchased by their customers in sub-Sahara Africa.

This discounting entices customers to buy more of that model of phones and probably helps the company gain more market share in the sub-Sahara African mobile smart phone market. An additional price variance may be given to its major distributor in Nigeria (the largest market in the sub-Sahara region) because the mobile smart phone market has already become competitive and needs a more aggressive strategy that includes more affordability of the product. All these scenarios can be configured in the SAP system to automatically determine the prices based on the requirement. In the next section, I explain how to realize some automated flexible prices with SAP pricing scale using some business scenarios I have implemented.

How to Configure and Set Up Different Price Scale Types Using the Sales Order

I assume that you already have a good understanding of SAP SD price determination.

Before I proceed with the business scenarios, there are certain terms I want to define:

  • Scale type: A scale type controls how the scale will be set. There are three price scale types in the standard SAP ERP Central Component (ECC): base scale (from scale), to scale, and the graduated-to-interval scale. My example scenarios in this article are based on how I have applied these scale types to fulfill clients’ automated flexible price requirements.
  • Scale basis: A scale basis is used to qualify the scale based on unit; scale basis can be in value, weight, quantity, time, or volume.

I now illustrate how these scale types are used with the following scenarios I have implemented for clients.

Patrick Imhen

Patrick Imhen is a business analyst and a certified SAP ERP consultant with proficient knowledge, skills, and experience in Materials Management (MM), Sales and Distribution (SD) and Plant Maintenance (PM) gathered from successful SAP implementations projects, support, training, business process analysis, modeling, unit testing, and integration testing. He has profound understanding of the supply chain process across industries and helps organizations cut the cost of operation and improve process optimization. He has more than 10 years’ experience in the business environment and six years’ experience in the SAP domain.

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