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SAP IS Retail Purchase Pricing Calculation

Purchase Pricing Calculation strategies in Retail Price Calculation:

In the Retail Market dynamics, primary focus is on the Pricing of the product. Pricing is the integral part of the Retail Marketing mix. It is foundation model of any business. To give the competitive advantage to the customers in market, the Retailers primarily focus on the low pricing methods, yet have substantial margins, to contribute to profits.

Retail sales price calculation depends on, how much the costs are optimized on the purchase side; and then brought for the retail price calculation.  Retail Pricing in SAP (VKP5) provides the options to optimize the purchase price. Here we primarily focus optimization of the costs on purchase pricing side in Retail Price. SAP provides the various options in VKP5 for using the “Purchase Price Determination Sequence”.

As per the definition it is: User-defined procedure for determining the purchase price (net/net) in the sales pricing of the pricing function.

In the purchase price determination sequences, you can define a sequence for purchase price determination types as well as entering specific parameters for them.

Two most used determinations sequences are –

  • 01 – Standard with Price determination
  • 03 – Vendor mixed price / standard

01 follows the standard purchase price determination, which is best suitable based on the master data is set and the configuration.  Whereas 02 follows the Vendor mix Prices. Meaning the purchase prices for various set from the different vendors and for the different sites/DCs are considered. Definitely this takes into account the master data.

Retailers like to go with Mixed Pricing (03) to average the procurement costs and reach optimized Retail Price (VKP0).

Further to this, Retail Price calculation parameters are different based on the level at which Retail Price is calculated.

This primarily has to be determined based on the selection parameters entered in VKP5

Sr. No Retail Price Calculation level 01 (Standard with Price Determination) 03 Vendor Mixed price/standard
1 Sales Organization level

Purchase Price:

PB00 prices from A018 (Purchase Org level) is  considered.

 

Standard Price Calculation (Purchase): 

Standard Price calculation will be based on Prices at the Purchase Organization level. The Purchase Organization that is direct or indirect responsible for the Sales Organization. The purchase price maintained for the regular vendor will be considered. If there is no regular vendor then the lowest Purchase price amongst the different vendors is considered. Any purchase prices at the lower (Store/DC) level will not be considered into calculation. Standard price will be done from the price for single vendor determined.

 

Retail Price Creation:

Retail Price will be at the Sales Organization & Distribution Channel Level (Condition table: A073).

Purchase Price:

PB00 prices from A018 (Purchase Org level) is  considered.

 

Mixed Price Calculation (Purchase): 

Mixed Price calculation is based on Prices at the Purchase Organization level. The Purchase Organization that is direct or indirect responsible for the Sales Organization. The purchase price maintained for all the vendors for the Purchase Organization be considered. Any purchase prices at the lower (Store/DC) level will not be considered into calculation. Mixed price will be done as the average of all Purchase price determined for all the vendors.

 

 

 

Retail Price Creation:

Retail Price will be at the Sales Organization & Distribution Channel Level (Condition table: A073).

2 Site/Plant/Store level

Purchase Price:

PB00 prices from A017 (Purchase Org/Plant level) is considered. PB00 prices from A018 (Purchase Org level). If price in A017 do not exist.

Standard Price Calculation:

Calculation will be based on Prices combination of Price determined at Purchase Org Level or Purchase Org/Plant level for regular vendor. No matter the price calculation is at the Site level, however Purchase Organization level that shadow the Site level price in the absence of Plant level Price.

 

Retail Price Creation:

Retail Price calculated will be at the Plant level  (A071)

Purchase Price:

PB00 prices from A017 (Purchase Org/Plant level) is considered. PB00 prices from A018 (Purchase Org level). If price in A017 do not exist.

Mixed Price Calculation:

Calculation will be based on Prices combination of Price determined at Purchase Org Level or Purchase Org/Plant level for each vendor. No matter the price calculation is at the Site level, however Purchase Organization level that can shadow the Site level price in the absence of Plant level Price. Average of all the prices determined.

 

Retail Price Creation:

Retail Price calculated will be at the Plant level  (A071)

3 Site/Plant Group Level

Purchase Pricing:

 

PB00 prices from A017 (Purchase Org/Plant) level.

PB00 prices from A018, if price in A017 do not exist.

 

Each Condition record for Plant belonging to the entered Price Group is considered. If the Plant level condition record do not exist in A017, then the PORG level condition record is subsequently selected from A018 for calculation.

Standard Price Calculation:

Will be based on Prices derived either at Purchase Org level or Purchase Org/Plant level for a regular vendor. In case of no regular vendor, lowest price from the various vendors will be determined.

 

Retail Price Creation:

Price will be created for respective Sales Org, Distribution Channel, Plant (A071).

Sales Organization, Distribution Channel will be determined from Plant in the plant group

Purchase Pricing:

 

PB00 prices from A017 (Purchase Org/Plant) level.

PB00 prices from A018, if price in A017 do not exist.

 

Each Condition record for Plant belonging to the entered Price Group is considered. If the Plant level condition record do not exist in A017, then the PORG level condition record is subsequently selected from A018 for calculation.

 

 

Mixed Price Calculation:

Will be based on Prices derived either at Purchase Org level or Purchase Org/Plant level for all the vendors. Average of all the prices determined.

 

 

Retail Price Creation:

Price will be created for respective Sales Org, Distribution Channel, Plant (A071).

Sales Organization, Distribution Channel will be determined from Plant in the plant group

4 Price List level

Purchase Pricing:

PB00 price is considered from table A018 (PORG level)

 

Standard Price Calculation:

will be based on Prices derived either at PORG level or PORG/Plant level for the regular vendor or the vendor with lowest price.

 

Retail Price Creation:

is created at the Price list level. Price list that is entered in the VKP5 screen. (A155)

Purchase Pricing:

PB00 price is considered from table A018 (PORG level)

 

Mixed Price Calculation:

will be based on Prices derived either at PORG level or PORG/Plant level for the various vendors. Average of all the prices determined.

 

Retail Price Creation:

Created at the Price list level. Price list that is entered in the VKP5 screen. (A155)

Info-record is the important master data, that plays role in purchase price determination in VKP5. One of the interesting thing to know in Purchase price determination is the Supply option (Available from & available to) maintenance in Info-record. If the Available from-to is maintained in the supply options then its range should align with the current date, then the condition record will appear for that vendor. If it is in the past, then this condition will not be considered.

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