Customer Hierarchies and Pricing 

Purpose

Customer hierarchies enable you to apply pricing and rebate agreements that are determined at a higher level than the customer. For each customer or node that you indicate as relevant for pricing, you can create condition records for pricing.

Prerequisites

You must create a pricing procedure in Customizing for sales and distribution for the condition types used in customer hierarchies. The standard version of the SAP System includes the following condition types for creating condition records in customer hierarchies:

Condition types

Condition type	Description
HI01	Percentage discount based on the node
HI02	Absolute discount based on material/node

These condition types have an exclusive indicator in the standard system, which means that if the same condition record is defined at different levels, the first valid record at the lowest level is chosen for these condition types.

You can also define individual access sequences for the condition types for customer hierarchies in Customizing.

Moreover, by using exclusion groupsyou can specify that if similar condition records exist at different levels of the hierarchy, the system takes the most favorable price or discount for the customer (regardless of which level in the hierarchy the pricing data comes from). For further information, see Condition Exclusion.

Process Flow

The following example explains how pricing is carried out in the customer hierarchy:

...

       1.      During negotiations, you establish a pricing agreement for a particular product line. You offer a national discount, available for all Smith stores. In addition, you offer a special promotional discount for Smith North.

       2.      You create the corresponding condition records for the Smith Central and Smith North nodes.

       3.      Customer 2743 issues an order. The system determines the current hierarchy path using partner determination:

Smith Central ® Smith North ® Smith Central

       4.      The system searches every level of the hierarchy path for valid condition records, beginning at the lowest level.

The system ignores the Smith Central node, as it is not relevant for pricing. There is a promotional discount in the master record for the Smith North node. Afterwards the system determines the national discount at Smith Central.

       5.      The system determines the price for the order. It takes into account all of the valid conditions in the hierarchy path.

Result

Customer 2743 receives the promotional discount and the regional discount.

Customer 2742 only receives the regional discount.