Right Solution, Right Time, Right Price

1. Pricing / Discount Conditions <Site> Right Solution, Right Time, Right Price

2. Business Process Workshop The objectives of the Pricing and Discount workshop is to: • Provide an overview of the Pricing and Discount Condition Business Processes • Demonstrate how SAP will be used to manage these processes. 1

3. Agenda Topics: I. Overview II. Pricing Conditions III. Discount Conditions IV. Manual Conditions • Reporting • References 2

4. I. Pricing and Discount Conditions - Overview 3

5. Pricing is a broad term to describe the calculation of prices and costs. Conditions represent a set of circumstances that apply when a price is calculated. The variable factors here – the customer, the material, the quantity, and the date – determine the final price the customer gets. The information about each of these can be stored in the system as master data. This master data is storedin the form of condition records. 4

6. Condition Records • Condition records allow you to store and retrieve pricing data in the system. All the pricing elements of daily business – the prices, discounts, freight charges, commissions, etc – that you want to use must be stored in the system as condition records. You can define as many condition records as you want for the different pricing elements for any validity period. These records are stored in SAP as master data and are retrieved when processing a sales document. • Master Data is centrally stored (shared across application modules) and processed to eliminate data redundancy. • These three master data records are critical to sales order processing: • Customer Master • Material Master • Pricing/Discount Conditions • All pricing and discount condition records will have validity dates. All validity dates will default from today’s date to 12/31/9999. (Note: This process is under review and may change after implementation). 5

7. Condition Types Conditions Prices Discounts/surcharges • Price List • Material Price • Customer/Material • Customer/Material Pricing Group • 3rd Party Commissions (Statistical) • Sales Area/Material Price Group • Pricing is carried out automatically based on predefined prices, discounts, and surcharges. Prices can be manually overridden on the sales order (when applicable). 6

8. Condition Types Some definitions to get us started….. Prices are the base from which the net price is calculated. Discounts are the reductions that can be applied to your price. Surcharges are additional prices added to your final price. Statistical conditions are used to track pricing within a sales document without affecting the net price of the order or sales document. 7

9. Creating Price/Discount Conditions Since condition records are considered master data, that is where you’ll find it in SAP. Most condition records are created by following the menu path: Logistics Master Data Conditions There are two places in master data where condition records can be created, changed and displayed. 18

10. Pricing and Discount conditions can be created, changed and displayed in SAP in two different modules: VK11 Logistics Master Data Conditions Select using condition type Create VK31 Logistics Master Data Conditions Create 9

11. Today’s Presentation will primarily use VK11. VK11 Logistics Master Data Conditions Select using condition type Create 10

12. Pricing and Discount conditions are organized into a sequence called a pricing procedure. During sales order processing, the pricing procedure determines the kinds of pricing elements you can use and in which sequence they are processed to arrive at a final price. The sequence of Yaskawa’s standard pricing procedure follow in this order: Material Price (PR00 or PRRP) Customer/Material Price Price List Type Material Customer/Material Price Group Discount (K030) Sales Area/Material Price Group Discount (Z030) Manual Discounts (PN00, RA00) Commissions Accrual (ZCOM) Manual Freight Conditions (ZPPA, ZCOD) Sales Taxes (XR1-4) Determining Price through the Pricing Procedure We'll review again later. 11

13. Determining Price through the Pricing Procedure In SAP, the system checks for the most specific condition record first (customer/material price). After this process, other discounts can be applied to the sales document. The system looks for the most specific pricing element (such as customer/material price of PR00) and works downward to the most general (customer/material price group discount K030). Then manual conditions can be added such as RA00, freight, taxes, etc. We'll review again later. 12

14. Exclusion Indicator The system can exclude condition types and records so that they are not taken into account during pricing in sales documents. If a condition record has exclusion marked, no additional pricing or discount conditions will be applied to calculate the final price. Here the customer has a customer/material price for the item. Since the exclusion indicator is marked, once the system reaches this price, it will stop looking for additional PR00 conditions to apply to this material. Additional manual discounts can still be taken off of this designated, “net” price. 13

15. II. Pricing Conditions 14

16. Pricing Condition Record Condition Type: PR00 Condition types determines selling price of materials Automatically copied into Sales Order. Mandatory condition that must be established to Process sales documents. Pricing Master Records are located in condition types in Sales and Distribution. Material Price (known as List Price in BOSS) is no longer maintained in the Material Master Record. Without this condition, an error will occur in your sales document and require to be established before proceeding. 15

17. Pricing Condition PR00 There are3 types of scenarios (key combination) that fall under PR00: • Customer/Material Price • Price List Type • Material Price The pricing procedure looks at the most specific first and works to the most general. 16

18. Customer/Material Price (PR00) Condition where a specific material price is designated for a specific customer. Also known as a “Net” price. The customer will receive this pricing whenever the material is ordered. Validity dates can be added to the pricing so it can be reviewed monthly, annually, etc. 17

19. Customer/Material Price (PR00) This condition can be used when a specific price has been designated for a specific material. Sales organization and distribution channel must be specified for this condition. Before creating this type of condition, check the customer master to verify the distribution channel the customer belongs to. 18

20. Creating Customer/Material Price (PR00) Initial Screen Enter PR00 as the condition type and hit enter. In the key combination, click on the Customer/Material button. Click on the green arrow to proceed. 19

21. Creating Customer/Material Price (PR00) Enter 0010 in Sales Organization. Enter the appropriate distribution channel. Use the match code button to search from a list. Enter the customer number. Use the match code button to search from a list. 20

22. Creating Customer/Material Price (PR00) Enter the material number. Use the match code button to search from a list. Hit the Tab button. Enter the rate or price for the material. Hit enter. Enter validity dates and check the exclusion indicator box with an X. Exclusion Indicator 21

23. Creating Customer/Material Price (PR00) The exclusion indicator prevent further customer discounts to be taken on the actual material price. However, manual discounts such as RA00 and PN00 can override the PR00 Customer/Material Price. (More discussion on this later). Once these steps are followed, you can click the orange disk icon to save your condition. 22

24. Price List Type (PR00) Condition where multiple customers share the same designated price for a specific material or several materials. All customers need to have the same price list type designated on their customer master record to receive this pricing. 23

25. Price List Type (PR00) The customer master designates that the customer will receive the price list type condition. This is designated at the “price list type” field on the customer master by “01”. It can be deactivated on sales orders and line items. 24

26. Price List Type (PR00) Currently, we have one scenario within <client> where this is condition is used: Honda. Affiliates of Honda can order material from <client> at the price we sell to Honda, provided they have the price list designated on their customer master. 25

27. Price List Type (PR00) Affiliates of Honda can order material from <client> at the price we sell to Honda, provided they have the price list designated on their customer master. In this example, there are several materials in this one price list. 26

28. Material Price (PR00) Condition where a specific material price is designated regardless of which customers order the material. In BOSS, it is a list price. The standard price of a material is no longer attached to the Material Master as in BOSS. 27

29. Material Price (PR00) To create a material price, the Sales organization and Distribution Channel must be specified. All materials will have a material price in both distribution channels. In the example below, the material price for the material SGDH-01AE is $996 in the Direct distribution channel. The same record should be input for the distribution channel 20 (Distribution). 28

30. Creating Material Price (PR00) Initial Screen Enter PR00 as the condition type and hit enter. In the key combination, click on the Material button. Click on the green arrow or hit enter to proceed. 29

31. Creating a Material Price (PR00) Enter 0010 for sales organization. Then enter the distribution channel. NOTE: Material prices should be setup in BOTH distribution channels. Enter the material number. Use the match code button to search from a list. Enter the desired rate. Enter validity dates and check the exclusion indicator box with an X. 30

32. Creating Material Price (PR00) Once these steps are followed, you can click the orange disk icon to save your condition. 31

33. Pricing Condition PRRP The price condition PRRP is used during repair/customer property situations where the material comes back to <client> as customer property. In the BOSS system, this was the List 9 price. Note: Exchange items will use the PR00 condition. These items are indicated by a # sign at the end of the material number. Example, SDGB-10ADG-P#. In this condition, the exclusion indicator automatically defaults indicating no further discounts are applicable. All other service pricing is established with the PR00 condition. 32

34. Pricing Condition Record Condition Type: PRRP Condition types determines selling price of materials Automatically copied into Sales Order Pricing Master Records are located in condition types in Sales and Distribution. Material Price (known as List Price in BOSS) is no longer maintained in the Material Master Record. 33

35. Pricing Condition PRRP There are3 types of scenarios (key combination) that fall under PRRP: • Customer/Material with release status • Price list type with release status • Material with release status • NOTE: <client> is currently on using the Material with release status. This price condition is very similar to PR00. Like PR00, the material price with release status should always be setup in BOTH distribution channels. However, PRRP can be entered manually. The order situation will determine which scenario should be used. 34

36. Review Questions What 3 scenarios does PR00 include? In the SAP pricing procedure, the system looks first at the most ______________ pricing element. Where must PR00 Price List type be specified to establish this pricing element? When setting up material prices, what distribution channel should they be established for? 35

37. Pricing Hands-On Pricing Exercise

38. III. Discount Conditions 37

39. Discount/Surcharge Conditions In BOSS, we used multipliers to establish pricing for our customers. In SAP, we will use discounts. The two types of discounts we will be using are: • Customer/Material Price Group (K030) • Sales Area/Material Price Group (Z030) Typically, these discount conditions are always applied to the material price in PR00. However, in certain situations, discounts can be excluded from the material price PR00 also. For example, in an exchange situation with a customer who has a K030 customer discount. Their discount shouldn’t be applied in the return order. The pricing procedure looks at the most specific first and works to the most general. 38

40. Customer/Material Price Group Discount Condition Record Condition Type: K030 Condition type determines net discount to the customer based on specific material groups. Automatically copied into Sales Order Currently many customers receive multipliers based on pricing groups designated on the item. Instead of using multipliers, we will use discounts in SAP. Example:. 39

41. Customer/Material Price Group Discount (K030) Material master record must have a material price group specified. All discounts are applicable to all materials with the designated material price group. This discount condition type will be used instead of a straight customer discount as had been used in BOSS. 40

42. Customer/Material Price Group Discount (K030) Here on the material master for a P5 inverter, the material pricing group is designated on the Sales Org. 2 tab. 41

43. Customer/Material Price Group Discount (K030) Current Material Price Groups in SAP are: Material Pricing Groups are maintained by Product Management. If you need one created, see the appropriate product manager. 42

44. Sales Area/Material Price Group Discount Condition Condition Type: Z030 Discount that applies to a whole sales area for specific Material groups. Automatically copied into Sales Order Example: All customers within the Columbus division receive a 20% discount on the material price group G5 inverters. 45

45. Sales Area/Material Price Group Discount (Z030) Material master record must have a material price group specified. Discount is given from the material price group in the material master and the material price (PR00) designated. In this example, all materials with the G5 material price group designated on the material master will receive the 20% discount. 46

46. 3rd Party Commission Condition Condition Type: ZCOM Condition type where a percentage of sales in commission is paid to a 3rd party Vendor or partner. Statistical condition that does not affect the net total price of a sales order but is recorded for accruing and paying commission. Example:Regan Controls receives a 7% commission from all orders received from Esab. In the customer master record for Esab, outside commission is established. 49

47. 3rd Party Commissions Discount (ZCOM) The pricing condition record “price group” designates that commission is paid on their sales orders to another party. This is designated at the “price group” field on the customer master by “01”. It can be deactivated on sales orders and line items. 50

48. 3rd Party Commissions Discount (ZCOM) The commissionable amount for a sales order can be seen in the header and line conditions of the sales order or document.. In this example, the commission is 7% of $52935.35. It is not a part of the net total price of the sales order. 51

49. Creating with Reference New condition records can be created with reference to existing condition records. During the process, changes can be made to the rate, validity period and additional sales data for the newly created record. When creating a condition with reference, the previous condition represents the information for the condition to be copied. In VK14, Create with Template, you are able to view and edit a copy of the pricing condition created in VK11. Once this copy had been edited and saved in VK14, it overrides previous price condition records. Create with Template should be used to change an existing pricing record’s validity dates or Rate, so that a historical record of the changes to the pricing record is saved. 56

50. Creating with Reference In this example, MagneTek is receiving a PC3 discount of 73.1%. For a short promotion MagneTek receives a 75% discount. We need to create this condition with reference to the previous. In VK14, we enter the pertinent information: Sales Org, Dist. Channel, Customer, and Material Group. And then hit the execute button. 57