What is price difference in SAP MM - Materials Management?

SAP Term: price difference

• Component: MM

• Component Name: Materials Management

• Description: A value that cannot be assigned to the material value at the time of posting. In the standard price procedure, each price variance is posted as a price difference. In the moving average price procedure, a price variance is posted as a price difference if there is no stock coverage for the quantity to which the posting relates.

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• Key Concepts: 
  Price difference is a term used in SAP Materials Management (MM) to refer to the difference between the price of a material that was originally ordered and the price of the same material when it is actually delivered. This difference can be either positive or negative, depending on whether the delivered price is higher or lower than the original order price. 
  
  How to use it: 
  In SAP MM, price differences are calculated automatically when a goods receipt is posted for an order. The system will compare the original order price with the delivered price and calculate the difference. This difference will then be posted to a special account in the general ledger. 
  
  Tips & Tricks: 
  When dealing with price differences, it is important to remember that they can be either positive or negative. If the delivered price is higher than the original order price, then the difference will be positive and will be posted to a special account in the general ledger. Conversely, if the delivered price is lower than the original order price, then the difference will be negative and will be posted to another special account in the general ledger. 
  
  Related Information: 
  Price differences are closely related to other terms such as invoice verification and goods receipt posting. Invoice verification is used to compare an invoice with an order and determine if there are any discrepancies between them. Goods receipt posting is used to post a goods receipt for an order and calculate any differences between the original order price and the delivered price.