The term pricing is used broadly to describe the calculation of prices (for external use by customers or vendors) and costs (for internal purposes, such as cost accounting). Conditions represent a set of circumstances that apply when a price is calculated. For example, a particular customer orders a certain quantity of a particular product on a certain day. The variable factors here - the customer, the product, the order quantity, the date - determine the final price the customer gets. The information about each of these factors can be stored in the system as master data. This master data is stored in the form of condition records.
The Condition Technique in Pricing
The condition technique refers to the method by which the system determines prices from information stored in condition records. In Sales and Distribution, the various elements used in the condition technique are set up and controlled in Customizing. During sales order processing, the system uses the condition technique to determine a variety of important pricing information. For example, the system automatically determines which gross price the customer should be charged and which discounts and surcharges are relevant given the conditions that apply.
Example of Pricing in the Sales Order
The following figure shows how the condition technique works in the background to produce the pricing information. The diagram shows how the various elements in the condition technique work together.
The system repeats this process for each condition type in the pricing procedure determines a final price.
For further information on the condition technique, seeIntroduction to the Condition Technique