What is factory gate pricing in SAP IS-R - SAP for Retail?

SAP Term: factory gate pricing

• Component: IS-R

• Component Name: SAP for Retail

• Description: Retail Principle that the retailer or wholesaler should feel responsible for and bear the costs of the primary distribution of goods from the supplier's factory to the next location in the supply chain, the retailer's or wholesaler's warehouse.

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• Key Concepts: 
  Factory gate pricing is a pricing strategy used in SAP for Retail (IS-R) that allows retailers to set prices for goods based on the cost of production. This type of pricing is beneficial for retailers because it allows them to accurately calculate their profits and losses, as well as ensure that they are not overcharging customers. 
  
  How to use it: 
  In order to use factory gate pricing in SAP for Retail, retailers must first determine the cost of production for each item they are selling. This includes the cost of materials, labor, and overhead costs. Once these costs have been determined, the retailer can then set a price for the item that reflects the cost of production. 
  
  Tips & Tricks: 
  When setting prices using factory gate pricing, it is important to keep in mind that the price should reflect the cost of production plus a reasonable profit margin. Additionally, it is important to keep an eye on market trends and adjust prices accordingly in order to remain competitive. 
  
  Related Information: 
  Factory gate pricing is just one of many pricing strategies available in SAP for Retail. Other strategies include competitive pricing, market-based pricing, and value-based pricing. Additionally, SAP for Retail also offers tools such as price optimization and price lists that can help retailers make informed decisions about their pricing strategies.