Price Point Group Configuration
This blog describes the steps to configure Price Point Group for Sell Price calculation. This blog also provides a brief overview about the functionality of price point group.
In Retail, most price points consist of amounts that are fractionally lower than a round number e.g. 1.99 AUD. Price points are used because consumers perceive them to be cheaper. Wholesalers, on the other hand, tend to use round numbers.
The sales price calculation function uses price points as targets for rounding, e.g. rounding a price calculated from planning data as 1.92 AUD to 1.99 AUD
Price point group
Price points are first grouped into price point groups by price point area. These price point groups are assigned to a combination of distribution chain and merchandise category. A rounding rule is also defined for the price point group, which defines how the price calculated in the sales price calculation function is to be rounded to the set prices of the price point group (rounded up or down, or to the nearest whole number).
In short, the price point group controls which price points are used during sales price calculation.
Configuration Steps :
Transaction : SPRO
SAP IMG Path : Logistics – General -> Retail Pricing -> Sales Price Calculation -> Price Point Group
There are two steps involved :
- Define Price Point Group and Assign Price Point Ranges
- Assign Price Point Group to Organizational Level/Merchandise Category
1. Define Price Point Group and Assign Price Point Ranges
In this step you define price point groups and assign price point ranges to them.
Price point range :
A price point range is used in Pricing to define price points within a particular price range.
Price point ranges are assigned to a price point group in which a rounding rule has been defined, according to which sales prices determined in the sales price calculation function are rounded either up or down.
Each price point range will comprise of :
- a lower limit
- an upper limit
- an increment
Price points for the price point range are determined by repeatedly adding the increment to the lower price point.
The following price point range could be defined for the price range 9.99 AUD to 19.99 AUD:
- Lower limit: 9.99
- Upper limit: 19.99
- Increment: 0.50
Adding the increment to the lower limit would create the following price points for this price point group: 9.99 AUD; 10.49 AUD; 10.99 AUD; 11.49 AUD, and so on.
a. Define Price point group
SAP IMG Path : Logistics – General -> Retail Pricing -> Sales Price Calculation -> Price Point Group-> Define Price Point Group and Assign Price Point Ranges
Click on New Entries. Enter the details as shown below :
b. Assign price point ranges
Select the defined price point group and click on ‘Assign price point ranges’
Enter the price point ranges
The price points for the first price point range will be 0.09, 0.19, 0.29…..9.89 and the price points for second price point range will be 9.99, 10.99, 11.99……999,999.99
Now the price point group is defined and the price point ranges are assigned to it.
Rounding rule for price point group
Rounding rule indicates how the price calculated in Sales Price Calculation is to be rounded to the price points in a price point group.
A price point interval is the gap between two neighbouring price points. The rounding rule value is expressed as a percentage of this interval; it defines a portion of the interval that starts at the point from which prices start to be rounded up and ends with the upper limit of the price point interval.
In the price point group defined above,
Lower Limit (First price) – 0.09
Upper Limit (Last price) – 9.89
Increment – 0.10
This will form the price point intervals as below:
Interval 1 : 0.09 to 0.19
Interval 2 : 0.19 to 0.29
Interval 3 : 0.29 to 0.39
Interval n : 9.79 to 9.89
Let us take Interval 3 (0.29 to 0.39) for understanding the rounding rule, Interval span is 0.10
If Rounding rule – 25
The price will be rounded down if it lies between 0.29 – 0.365 and it will be rounded up if it lies between 0.365-0.39 (25% of the interval).
If Rounding rule – 75
The price will be rounded down if it lies between 0.29-0.315 and it will be rounded up if it lies between 0.315-0.39 (75% of the interval).
If Rounding rule – 50, the turning point will be at 0.34. In other words, the rule Rounding rule = 50.00 means that prices are always rounded to the nearest interval limit.
Note : If Rounding rule = 0, prices are rounded down to the nearest whole interval; if Rounding rule = 100, they are rounded up to the nearest whole interval.
A simplified formula for turning point can be
Turning point = Upper limit – (rounding rule/100)*interval span
Turning point = 0.39-(25/100)*0.1=0.365
2. Assign Price Point Group to Organizational Level/Merchandise Category
SAP IMG Path : Logistics – General -> Retail Pricing -> Sales Price Calculation -> Price Point Group-> Assign Price Point Group to Organizational Level/Merchandise Category
Click on New Entries
Enter the details as shown below :
The Price point group Z00001 defined in step 1 is assigned to MC 102010202 for sales org 1005/10.
The Sales price calculation for the MC 102010202 will follow the rounding as per price point group Z00001.
Sales Price Calculation
Article belonging to MC 102010202 (e.g. 701877)
Sales price is 12.99 rounded as per second price point range under Z00001
To check the other price point range, adjust the purchase price of article to 5 and run VKP5 again, to see sell price calculation
Sales price is 6.49 rounded as per first price point range under Z00001