What is market rate pricing in SAP IS-B-PA - Profitability Analysis?

SAP Term: market rate pricing

• Component: IS-B-PA

• Component Name: Profitability Analysis

• Description: Financial mathematical procedure for valuating interest-dependent bank transactions. For determining source-related profit and loss contribut ions at transaction level, each single transaction is compared with a a similarly structured comparable alternative transaction on the money and capital market. In particular, it is possible in this way to calculate the partial contribution obtained from the customer transaction area to the gross contribution of the single transaction. As an alternative to using market rates, you can use the financing and refinancing rates entered in Treasury as a basis for comparison. SAP Banking supports this method which in the anglo-american area is called Funds Transfer Pricing as part of bank transaction costing.

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• Key Concepts: 
  Market rate pricing is a pricing strategy used in SAP IS-B-PA Profitability Analysis. It is based on the market rate of a product or service, which is determined by the current market conditions. This pricing strategy allows companies to adjust their prices to remain competitive and maximize their profits. 
  
  How to use it: 
  In SAP IS-B-PA Profitability Analysis, market rate pricing can be used to set prices for products or services. The market rate of a product or service is determined by analyzing the current market conditions and taking into account factors such as supply and demand, competition, and customer preferences. Once the market rate has been determined, the company can then set their prices accordingly. 
  
  Tips & Tricks: 
  When using market rate pricing in SAP IS-B-PA Profitability Analysis, it is important to keep in mind that the market rate can change over time. Therefore, it is important to regularly monitor the market conditions and adjust prices accordingly. Additionally, it is important to consider customer preferences when setting prices as this can help to maximize profits. 
  
  Related Information: 
  For more information on market rate pricing in SAP IS-B-PA Profitability Analysis, please refer to the official SAP documentation. Additionally, there are many online resources available that provide further information on this topic.