Executing Retail Pricing

Objectives

After completing this lesson, you will be able to:

  • Execute Retail Pricing

Retail Pricing

Due to the large article volumes and typically various pricing levels used in a retail company, system support for creating sales prices and, for keeping them up-to-date is essential. With the help of markup conditions and pricing-related system settings, SAP Retail is able to suggest the right retail price for each article. With the change pointer functionality, it is possible to have the system automatically monitor, if sales prices have to be adjusted.

With Retail Pricing, sales prices can be created on the following levels - from the most general to the most specific level:

  • Distribution chain

  • Distribution chain with price-list

  • Site

The sales price determination always picks the most detailed price. For example, a site-specific sales price for an article exists. Then, the system uses this site-specific price for the relevant site. If no site-specific price exists, then the system checks for a price on the next higher level, that is, it analyzes, if a price list is assigned. If not, then the most general price on distribution chain level is used.

Retail pricing (sales price calculation) allows you to efficiently maintain the sales prices for articles in a store, or for a range of stores on distribution chain -, or price list level. You can also maintain DC transfer prices in two-step pricing, as well as sales prices on distribution chain-, or price list level for customer-related sales processes (wholesale prices for sales orders).

In the sales price calculation function, you can manually change the calculation data, for example the cost price, the markup, or final price. You can also display additional detailed information, for example for the purchase or sales price calculation, or how the current retail price is stored on the database. Besides the regular markup calculation, the price calculation also supports additional pricing functions, such as family pricing, where a predefined group of articles is calculated together, or competitor pricing, where the own sales price is calculated using the assigned competitor pricing strategy.

Sales prices can be created for individual or several articles, and one or more organizational levels in one transaction. As mentioned before, the calculation of the sales prices is usually based on purchase prices and predefined markups. Planned markups can be saved in the system for the markup calculation.

Planned markups increase the purchase price (net/net). They reflect both the general cost components, and the profit that a company aims to achieve by selling the articles.

You would normally define a planned markup (as a percentage) for a combination of sales organization, distribution channel (distribution chain), and merchandise category, or for a distribution chain with price list, and merchandise category. As planned markups are condition types, however, you can also set them up for other organizational levels, for example, even for individual articles if required.

Note
The SAP condition technique and it's elements, such as condition types, is going to be introduced in the next unit, Requirements Planning from Supplier to Distribution Center, lesson, Setting Up Purchase Order Management.

In the initial screen of the sales price calculation, you determine the layout of the pricing screen by choosing the following:

  • List group

  • List variant

You use the list group to define if the article is displayed in the sales price calculation at header level, with the organizational levels at item level (list group A), or vice versa (list group B). List groups C and D are used to display the pricing table in an SAP ABAP List Viewer (ALV) design. With those, both the selected articles and the organizational levels are displayed in a table on one screen.

List variants are used to define the layout of the pricing table: It controls the selection and sequence of the table columns, that is, the sequence of the list fields. In customizing, several list variants can be defined. There, you also determine how the list fields are populated, and how the final price is stored on the database after saving a calculation.

When sites are supplied directly from vendors, the sales price calculation is called "one-step price calculation", as the calculation of the sales prices for the stores is directly based on the purchase price from the external vendor.

It is also possible to perform the sales price calculation based on a predetermined sales price, using a backwards calculation, for example for articles with a fixed price. The system will then automatically calculate various pricing key figures, such as the gross and net margin.

Stores are not necessarily always supplied directly by external vendors. It is rather quite common that a retailer operates warehouses (distribution centers) which keep stock of the items. The DCs in turn then supply the stores.

In accordance with this two-step process in logistics, a two-step price calculation is performed. With that, the purchase prices of the stores are based on the transfer price of the distribution center, which in turn was calculated using the external vendor's purchase price.

When you want to execute and display a 2-step sales price calculation, you have to enter both the DC and the store distribution chains, in our example, RG10/R5 and RG10/R1. The calculation starts with the supply source determination for the DC distribution chain, and the system finds an external vendor. The net cost value is usually based on the vendor's purchasing conditions. Using a possibly maintained planned markup, the system calculates a DC transfer price. This transfer price is shown in the Final SP field, and copied to the store distribution chain as incoming (purchase) price. Again, from there a markup calculation results in the final sales price for the consumer (retail price).

Note
In order to automatically keep the sales prices in your system up-to-date, changes at the cost side (for example of the purchase price, or vendor discount rate), or in master data settings (for example a change in the supply source) can be used to automatically create change pointers. By executing the pricing worklist regularly, the system evaluates these change pointers and suggests new retail prices if applicable.

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