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.  

Scenario 1

  A client that produces consumable goods had a business requirement regarding pricing for a product. It has two customer groups (rural distributors and urban distributors) for the product. It wanted to apply automated flexible prices to these customer groups based on the quantity purchased. The urban distributors purchase a minimum of 1,000 cartons, while the rural distributors purchase a minimum of 200 cartons of the product. According to the company policy, it does not maintain any discount general ledger (G/L) account, which means there is no provision for a discount. In this case, because the company used a defined quantity range as a condition for its prices, the base scale (from scale) type is applicable. Example: I realize this scenario in the SAP system using an imaginary company code 1000, customer group ZR (rural distributors), and ZU (urban distributors) with a product VAC-0001 (VAC Biscuit). For the customer group ZR (rural distributors), the minimum order is 200 cartons of VAC Biscuit: Price scale: From 200 cartons = 9 euros per carton From 500 cartons = 8.40 euros per carton From 700 cartons = 8 euros per carton From 1,000 cartons = 7/ euros per carton For the Customer group ZU (urban distributors), the minimum order is 1000 cartons of VAC Biscuit. Price Scale: From 1,000 cartons = 7.30 euros per carton From 10,000 cartons = 7 euros per carton For this scenario, I used an existing condition type PR00 with a Quantity scale type and can be maintained in condition record option of the scale type. Because only one scale basis is needed for this requirement, you cannot use a condition type for more than one scale basis. I also assigned a suitable access with the required fields I need to set up the above price requirement in the access sequence assigned to the condition type PR00. To see the access sequence assigned to condition type PR00 use transaction code V/06 or follow SAP IMG menu path Sales and Distribution > Basic Functions > Pricing > Price Control. Click the execute icon beside Define Condition Types to display the activity list screen for condition types (Figure 1). Double-click Maintain Condition Types. In the screen that appears (Figure 2), select the PR00 (price) condition type and click the details icon  to show details of the condition type in the next screen (Figure 3). Figure 3 shows the details for condition type PR00 (Price). You can see the assigned access sequence PR02 at the top left. You can also see that the scale basis is Quantity and that the scale type is set to the can be maintained in con (can be maintained in condition record) option. The next step is to assign the required access with the required field combination to access sequence PR02. To complete this step, use transaction code V/07 or follow IMG menu path Sales and Distribution > Basic Functions > Pricing > Price Control. Click the execute icon beside Define Access Sequences to display the activity list screen for access sequences (Figure 4). Double-click Maintain Access Sequences. This action displays the screen shown in Figure 5. In Figure 5, select the PR02 (Price with Release Status) access sequence and click the Accesses folder on the left pane to open the accesses contained in the access sequence PR02 (Price with Release Status). The accesses are then displayed in the Overview Accesses section of Figure 6. Figure 6 shows the available accesses in the access sequence. Note that none of the accesses have a field combination with Customer Group, which is a requirement for my access sequence. To define a suitable access with a Customer Group field to this access sequence PR02 (Price with Release Status), select an existing access, and then click the copy icon (highlighted in a red box in Figure 6). Assign an access number under No. and then select a suitable access from the drop-down list under Tab. For my example use 50 as the access number and 913 as the appropriate table because it is suitable for the required fields (Figure 7). After selecting the appropriate access, click the enter icon (the green checkmark) to confirm your new entries. This action opens the screen in Figure 8 in which you select the newly defined access and click the Fields folder on the left pane to see the fields of the access in the screen shown in Figure 9. After completing the configuration, click the save icon to save it. Now that the configuration of the settings for the price scale requirement is done, the condition record that is master data has to be created for the condition type PR00 and the required price scale set accordingly. To create a condition record for PR00 use transaction code VK11 or follow menu path Logistics > Sales and Distribution > Master Data > Conditions > Select Using Condition Type. Expand the Select Using Condition Type folder and click VK11 - Create. The system then opens the Create Condition Records initial screen in which you enter the condition type PR00 in the Condition type field and click the Key Combination button (Figure 10). After you click the Key Combination button, the accesses assigned in the access sequence to PR00 are displayed in the screen shown in Figure 11. In this screen, go to the Key Combination section, select the appropriate access, and click the continue icon . After you click the continue icon, the Create Condition Record Overview screen for PR00 opens. Input the relevant data. For my example, enter 1000 in the Sales Organization field and 10 in Distribution Channel field. Under the Material and Description columns, enter VAC – 00001 and VAC-Biscuit, respectively. Under the C (customer group) column, enter ZR (Rural Distributors) and then enter ZU (Urban Distributors) (Figure 12). According to the requirement, rural distributors can purchase a minimum of 200 cartons of VAC Biscuit at 9 euros per carton. After entering the necessary data, set up the price scale as required for the customer group ZR (rural distributors). To set up the price scales, click Goto – Scales in the menu bar or click the scales icon  in the application tool bar as shown in Figure 13. This action opens the screen in Figure 14. In Figure 14 you set up the appropriate scales. You can also see that the scale basis is quantity and the scale type is from (base scale). Because the PR00 condition type is configured with scale type can be maintained in condition record option in customizing, the scale type can be changed in this condition record (that is not relevant for this example). This same process shown in Figures 12, 13, and 14 is repeated for the second customer group ZU (Urban Distributors) with 7.30 euros per carton for a minimum order quantity of 1,000 cartons (Figures 15 and 16). Now that the price scale has been set up for the different customer groups with a condition based on quantity, the system automatically proposes this flexible price in the sales order for any customer in these customer groups for the same product without the manual interference of the user. I demonstrate some test examples for each quantity range using a sales order with document type OR, Sales Organization 1000, Distribution Channel 10, Division 00, imaginary customers RU-0001 (Trapinz Foods), and UR-0001 (Dicome). Trapinz Foods is under Customer group ZR (Rural Distributors), while Dicome is under Customer group ZU (Urban Distributors). First, I create a Sales Order for customer RU-0001 (Trapinz Foods) and test all the price scale scenarios. To create a sales order, use transaction code VA01 or follow menu path Logistics > Sales and Distribution > Sales > Order. Expand the Order folder and click VA01 – Create. This action opens the Create Sales Order: Initial Screen (Figure 17) in which you enter the necessary data. Click the enter icon (not shown) or press the Enter key on your keyboard to open the Create Standard Order Overview screen. In the Create Standard Order Overview screen, enter the customer number, material number (Product), and quantity starting with 200 cartons. After you click the enter icon or press the Enter key on the keyboard, the system automatically proposes 9 euros per carton for this customer as shown in Figure 18. Now I change the quantity of the same sales order to 500 cartons and the system automatically proposes 8.40 euros per carton according to the configured price scale (Figure 19). Next, I change the quantity of the same sales order to 900 cartons and the system automatically proposes 8 euros per carton as shown in Figure 20. Next, I change the quantity of the same sales order to 2,000 cartons and the system automatically proposes 7 euros per carton as shown in Figure 21. Finally, I save the sales document with 2,000 cartons of VAC – Biscuit by clicking the save icon. In the next example I create a sales order for a customer in the customer group ZU (Urban Distributors) RU-0001 (Dicome) with a minimum order of 1,000 cartons at 7.3 euros per carton. To create a sales order, follow the above procedure in the previous example (see the instructions before Figure 17). In the Create Standard Order Overview screen, enter the customer number, material number (Product), and quantity starting with 2,000 cartons. After you click the enter icon, the system automatically proposes 7.30 euros per carton for this customer as shown in Figure 22 based on the price scale configured for the customer group ZU. Next, I change the quantity of the same sales order to 10,000 cartons and the system automatically proposes 7 euros per carton as shown in Figure 23. Finally, I save the sales document with 10,000 cartons of VAC – Biscuit by clicking the save icon. The automated flexible price strategy requirement has been fully realized in the SAP system using SAP pricing scale functionality. I provide you with more examples using business scenarios with the price strategy of other scale types and scale basis.  

Scenario 2

  A client that provides oil and gas services and has two plants located at different regions had a requirement to give different discounts to its customers for different ordered amounts. The company also requested that the different plants have a different discount range that should be automatically determined without the manual input by users. For this scenario, I use an imaginary company again. I use a default material discount condition type K004. Because this condition type has already been defined in the SAP system and assigned to the price procedure (see SAP price determination), I create a condition record for it and set up the scale. To create the condition record use transaction code VK11 or follow menu path Logistics > Sales and Distribution > Master Data > Conditions > Select Using Condition Type. Expand the Select Using Condition Type folder and click VK11 – Create. The system then opens the screen shown in Figure 24 in which you enter K004 in the Condition type field and click the Key Combination button. The accesses in the assigned access sequence to K004 are then displayed in Figure 25. Select the appropriate access and click the continue icon (Figure 25). The system opens the screen in Figure 26. Enter the relevant data. For my example, use Material Group 004 (Services), Plant 0099 (Service Center (South), and Plant 1100 (Service Center (East). After you enter the necessary data, set up the price scale as required for the plants. To set up the price scales, click Goto – Scales from the menu bar. For my example click the scales icon in the application tool bar as shown in Figure 26. Based on this example, the price scales are as follows: The Price Scale for Plant 0099 (Service Center South) Figure 27 shows the following details for the price scale for plant 0999 (Service Center South): 1 – 99, 999. 99 euros (there will be no discount) 100,000 – 1,000,000 euros (there is a 5 percent discount) This data implies that there will be no discount when a customer orders up to the value of 99, 999. 99 euros, while 5 percent will be given to a customer who orders to the value of 1,000,000 euros. Note that this scale type is the to scale and the scale basis is a value scale. The Price Scale for Plant 1100 (Service Center (East) Figure 28 shows the following details for the price scale for plant 1100 (Service Center East):

• 1 – 199, 999. 99 euros (there will be no discount)
• 200,000 – 1,000,000 euros (there is 4 percent discount)

This data shows that there will be no discount when a customer orders for a service up to the value of 199, 999. 99 euros, while 4 percent will be given to a customer who purchases a service up to the value of 1,000,000 euros in this plant. This is because it costs more to execute the same service in this Eastern region than in the Southern service center. I demonstrate some test examples for these price scales using a sales order with document type SOR, Sales Organization 1000, Distribution Channel 10, Division 00, imaginary customer IOC-V99 (Dafzil Oil & Gas) for a service 6791 (Well Testing). Dafzil Oil & Gas company placed an order for a well-testing service with a price of 20,000 euros per well in the eastern region executed by plant 0099 (Service Center [East]). To create a sales order, use transaction code VA01 or follow menu path Logistics > Sales and Distribution > Sales > Order. Expand the Order folder and click VK01 – Create. After you click VK01 – Create, the system opens the Create Sales Order initial screen (Figure 29). Enter the necessary data and click on the enter icon or press the Enter key on your keyboard to open the Create Services Overview screen. In the Create Services Overview screen, enter the customer number, material number (service), and quantity starting with four wells. When you click the enter icon, the system automatically proposes 20,000 euros as the price for each well testing with the net value of 80,000 euros as shown in Figure 30. There is no discount because the value is less than 100,000 euros (refer back to Figure 27). A further look at the item price condition schema shows that condition type K004 did not propose any discount. To go to the item condition schema, select the item and click Goto > Item > Conditions on the menu bar or click the shortcut icon  (Figures 31 and 32). Now let’s assume that the customer wants to order well testing for eight wells. Figure 33 shows the net value automatically determined by the system as 152,000 euros instead of 160,000 euros because the net value is in the range of the 5 percent discount, which is 100,000–1,000,000 euros in the price scale (refer to Figure 27). A further look at the item price condition schema shows that condition type K004 determined a 5 percent discount (Figure 34). For the next test, I used the same customer with the same ordered quantity for a well-testing service for eight wells with the same price of 20,000 euros per each well testing, but this time for a different plant, Plant 1100 (Service center (South). Figure 35 shows the net value automatically determined by the system as 160,000 euros. There is no discount proposed because the discount scale for this plant starts from 200,000 euros (refer to Figure 28). Now let’s assume the customer wants to order well testing for 10 wells in plant 1100. Figure 36 shows the net value automatically determined by the system as 192,000 euros instead of 200,000 euros because the net value is in the range of the 4 percent discount in the price scale, which is 200,000–1,000,000 euros (refer to Figure 28). A further look at the item price condition schema shows that condition type K004 determined a 4 percent discount (Figure 37). Again, I use these examples to show you how an automated flexible price strategy is executed using SAP pricing scale.  

Scenario 3

  Using an imaginary company again, I describe a scenario in which I use the graduated interval scale type for a scale basis of quantity. In this scenario, one of the client’s requirements was to set up an automated price strategy so that customers are given different prices based on the quantity of product they ordered. A product price can be at a certain rate until it gets to a threshold and additional quantities from that threshold get different prices. For instance, in my example, a customer places an order for a product G0X0Z (office desk). The price of the office table is 10 euros per office desk; the price scale is set to graduate to 9.30 euros for any quantities above 10 pieces of office desk and 9 euros for quantities above 100 pieces of office desk. That means 1 to 10 pieces of the office desk will cost 10 euros per piece, but from the 11th piece, the price will graduate to 9.30 euros per piece and so on. So as in the former scenarios, I realized this requirement in the SAP system by using a default condition type PR02 with a graduated interval scale type. The first step then is to set up the condition record and price scales. To create the condition record use transaction code VK11 or follow menu path Logistics > Sales and Distribution > Master Data > Conditions > Select Using Condition Type. Expand the Select Using Condition Type folder and click VK11 – Create. The system then opens the Create Condition Records initial screen (Figure 38). In this screen enter PR02 in the Condition type field and click the Key Combination button. The accesses in the assigned access sequence to PR02 are displayed as shown in Figure 39. Select the appropriate access and click the continue icon. The system now opens the screen shown in Figure 40 in which you enter the relevant data. In this example, I used Sales Organization 1000, Distribution Channel 10, and Material G0X0Z (office desk). After you enter the necessary data, set up the price scales as required for the material. To set up the price scales, click Goto – Scales from the menu bar. In this example click the scales icon in the application tool bar as shown in Figure 40. Based on this requirement, the following price scales for the office desk are shown in Figure 41:

• 1 – 10 pieces of the office desk will be given at the rate of 10 euros each.
• The 11th – 100th pieces of the office desk will be given at the rate of 9.30 euros each.
• Then the 101 pieces and above of the office desk will be given at the rate of 9 euros each.

Note that the graduated interval scale type uses the to principle to graduate the scale intervals. After setting up the price scale, click the save icon (not shown) to save the condition record. I now demonstrate some test examples for these price scales using a sales order with document type OR, Sales Organization 1000, Distribution Channel 10, Division 00, imaginary customer UPW0001 (UDOWAC), and a product (material) G0X0Z (Office Desk) in plant 1200. To create a sales order, use transaction code VA01 or follow menu path Logistics > Sales and Distribution > Sales > Order. Expand the Order folder and click VA01 - Create. The system now opens the Create Sales Order: Initial Screen in which you enter the necessary data (Figure 42). Click the enter icon or press the Enter key on your keyboard to open the Create Standard Order Overview screen. In the Create Standard Order Overview screen, enter the customer number, material number, and quantity starting with 1 office desk. After you click the enter icon, the system automatically determines 10 euros as the price (Figure 43). A further look at the item price condition schema shows the condition type PR02 value as 10 euros (Figure 44). Now let’s assume the customer places an order for 11 pieces of office desk. Figure 45 shows the net value automatically determined by the system as 109.30 euros instead of 110 euros at 10 euros per piece because the first 10 pieces of the office desk are 10 euros per piece based on the price scale and from the 11th office desk, the price dropped to 9.30 euros based on the scale. A further look at the item price condition schema shows the condition type PR02 value as 10 euros and a graduated condition type PR02 for the new price scale of 9.30 euros (Figure 46). This is how the graduated interval scale type scenario performs. Finally, click the save icon to save the sales order. Note that these scale types can be used for some other automated price strategies.  

How to Use a Group Condition Routine to Apply Price Scales to Categorized Products

  The application of the group condition routine to a price scale can be used to apply a cumulative price condition to a group of categorized items in a sales document. For instance, imagine a scenario in which an organization considers giving a discount to its customers that ordered a certain amount or quantity of products on a single sales order. In this example, customers would receive a 5 percent discount when the total amount of the different products ordered reaches 1,000 euros and above. To use the group condition routine, the group condition should be checked in the particular condition type and a group condition routine selected (there are only four standard group condition routines in SAP ECC although a custom routine can be created). In this example, I used a condition type ZA01 to configure the group condition routing. The requirement is to give a discount to customers whose total order in a single sales order exceeds a certain threshold amount. Therefore, I need a condition type with an access sequence that has access for a sales document type and ZA01 condition type fulfills the requirement with access sequence Z031. The first step for this example is to properly set up the condition type ZA01 as a group condition. To complete this step, use transaction code V/06 or follow IMG menu path Sales and Distribution > Basic Functions > Pricing > Pricing Control. Click the execute icon beside Define Condition Types to display the activity list screen for condition types (Figure 47). Double-click Maintain Condition Types. The SAP system then displays the Condition Types Overview screen in which you select the ZA01 (Discount from Gross) condition type and click the details icon to show details of the condition type (Figure 48). When you click the selected condition type detail, the details are displayed as shown in Figure 49. In the details screen of condition type ZA01 (Discount from Gross), you can see the assigned access sequence Z031 at the top left. The Group condition check box should be checked, and a group condition routine assigned. In this example I selected 1 (Total document) for the group condition routine; see the value in the GrpCond. routine field. The Scale Basis is Value scale and Scale Type is Base-scale (From Scale). Now that the configuration settings for the group condition routine and price scale for the condition type have been done, the next step is to create the condition record for the condition type ZA01 and set the required price scale accordingly. The group condition routine 1 (total document) assigned to ZA01 condition type is categorized for the total ordered value of a document. This data implies that the discount price scale will be effective on the total ordered value of whatever sales document is assigned in the condition record. For this example, use OR (standard sales order). To create a condition record for ZA01 use transaction code MK11 or follow the menu path Logistics > Sales and Distribution > Master Data > Conditions > Select Using Condition Type. Expand the Select Using Condition Type folder and click VK11 – Create to display the Create Condition Records initial screen (Figure 50) in which you enter ZA01 in the Condition type field and click the Key Combination button. The accesses in the assigned access sequence to ZA01 are then displayed as shown in Figure 51. Select the appropriate access and click the continue icon. The system then opens the screen shown in Figure 52. Enter the relevant data. For this example, use Sales Document Type OR (standard order) as shown in Figure 52. After you enter the necessary data, set up the price scale as required for the sales document type. To set up the price scales, click Goto – Scales from the menu bar. In this example click the scales icon in the application tool bar as shown in Figure 52. This action displays the screen in Figure 53. Based on the price scale requirement:

• Any customer with a total value of products from 100,000 euros in this sales document OR will get a 5 percent discount.
• A 10 percent discount will also be applicable for the total document order value from 500,000 euros.

See Figure 53 for the price scales. After setting up the price scale, click the save icon (not shown) to save the condition record. Next, I show you some test examples for these price scales using a sales order with document type OR, Sales Organization 1000, Distribution Channel 10, Division 00, imaginary customer IOC-V99 (Dafzil Oil & Gas ). To create a sales order, use transaction code VA01 or follow the menu path Logistics > Sales and Distribution > Sales > Order. Expand the Order folder and click VA01 - Create. The system then opens the Create Sales Order initial screen (Figure 54). Enter the necessary data and then click the enter icon or press the Enter key on your keyboard to open the Create Standard Order Overview screen. In the Create Standard Order Overview screen (Figure 55), enter the customer number, material number, and quantity starting with 300 pieces of bearing case. After you click the enter icon (not shown), the system automatically determines a net value of 60,000 euros at 200 euros per piece. That means no discount is determined yet. If the customer also orders 300 pieces of bearing case (black) at 200 euros per piece, Figure 56 shows a total net value of 114,000 euros instead of 120,000 euros (60,000 euros for bearing case + 60,000 euros for bearing case [black]). This indicates that a 5 percent discount was applied automatically because the total value of the sales document exceeded 100,000 euros. A further look at the document header price condition schema shows the discount value of condition type ZA01 as 5 percent of the gross value (Figure 57). To go to the Header Condition Schema, click Goto > Header > Condition from the menu bar in the Create Standard Order Overview screen. Let’s assume that the customer adds another order of 5,000 pieces of bracket at the rate of 100 euros per piece. Figure 58 shows a total net value of 558,000 euros instead of 620,000 euros (60,000 euros for bearing case + 60,000 euros for bearing case (black) + 500,000 euros for bracket). This indicates that a 10 percent discount was applied automatically because the total value of the sales document has exceeded 500,000 euros based on the price scale. A further look at the document header price condition schema shows the discount value of condition type ZA01 as 10 percent of the gross value (Figure 59). Finally, save the sales order. There are other business requirements that can be realized with the group condition routine within SAP pricing scale with the standard SAP configuration or custom configuration, such as using Group condition routine 2 across all Price Condition Types in a document where you have different price condition types. Group condition routine 3 can also be used for business requirements such as surcharges, discounts, and freight for material pricing groups. Automated flexibility of prices can help organizations satisfy their customers using the fit-to-customer technique and SAP pricing scale functionality. It can help an organization stay competitive and responsive.