Reviewing Sales Price Conditions

Objectives

After completing this lesson, you will be able to:

  • Explain one- and two-step price calculations
  • Outline how to maintain different prices for different colors of the same generic material

One- and Two-Step Price Calculation

One-Step Price Calculation

When plants are supplied directly from vendors, a sales price calculation called "one-step price calculation" is used. The calculation of the sales prices for the stores is based on the purchase price from the external vendor. Therefore it could end up with different purchase prices for stores, for example, from different store-dependent basic purchase prices or vendor discounts.

It is also possible to perform the sales price calculation based on the sales price you want to use. The system will then automatically calculate different factors, such as the margin. The actual markup that is determined can also be overwritten.

Stores A and B have different purchase prices, but the same planned markup. On the other hand, stores A and C have the same purchase price ($ 15.00), but different planned markups.

For Wholesale customers a sales price calculation can be performed as well. A sales price can be maintained manually or based on planned markups.

Two-Step Price Calculation

In addition to stores being supplied directly by an external vendor, there is also another process in the logistics of a retail company: The vendor first sends the materials to a distribution center, from where they are then distributed within the company to stores and franchisees. Here, the sales price for the stores is calculated on the basis of the distribution center's transfer price.

First, the transfer prices of the distribution center for different distribution chains are calculated. In the second step, the sales prices for the stores are calculated based on the distribution center's transfer price.

In addition, it is also possible to perform a two-step, or even a multi-step, calculation for deliveries between distribution centers.

The figure illustrates the prerequisites for a two-step calculation.

Prerequisite for two-step calculation

In order to be able to carry out two-step calculation, you need to make the following settings in the material master data, the master data of the supplying distribution center and the master data of the receiving store.

Material master data settings

In the material master data, it is needed to use the Source of Supply indicator to indicate that an internal source of supply is defined. This indicator can be set in the Basic Data view or set it for individual stores and distribution centers in the Store Logistics and DC Logistics views.

Further explanations:

  • Master data of the supplying distribution center: In the master data of the supplying distribution center, the supply relationship must be defined by specifying the distribution chain via which the distribution center delivers to the store. To do this, enter the relevant distribution chain under Distribution Chains for plant.
  • Master data of the receiving store:
    • In the customer master data of the receiving store, it is needed to maintain the distribution chain specified in the master data of the supplying distribution center under Sales Areas.
    • The distribution center must be entered as the supplying plant for the store.

If prices should be calculated at distribution chain level, it is needed to make the settings described above for the reference distribution center of the distribution center distribution chain or the reference store of the store distribution chain.

Generic Materials: Pricing Control

A sales price can be copied from a generic material to its variants by the Pricing reference material field in the master record for each variant. The pricing reference material can be specified in the basic data view or the sales view of the variant's master data. In the material master of the variants, the material number of the generic material or that of another variant is entered in the pricing reference material field. The sales price valid for the material entered in this field is then adopted in the sales price calculation for the variant. The inherited sales price cannot be changed in the pricing table. If the pricing reference material field is empty, the sales price for this variant must be calculated separately.

In the master data of the generic material, the Pricing profile field is used to generate default values for the pricing reference material field in the master data of the variants. This makes it easier to maintain the pricing reference material field when creating or changing generic materials. The option available within the system are:

Blank
Variant prices can differ, do not propose generic material as reference.
1

Variants can be priced differently, propose generic material as reference.

2

All variants have the sales price of the generic material.

Generic Materials, Pricing Control

The figure illustrates the typical calculation controls.

Log in to track your progress & complete quizzes