Free goods

Description

In many industries it is common to provide products free of charge, or not to charge the customer for some of the goods sold when a customer purchases certain goods.

There are different types of free goods agreement. In an exclusive agreement, the manufacturer adds free goods to the customer's original order quantity. The free item could be the same as the product ordered, or another product. In an inclusive agreement, the manufacturer ships part of the customer's order quantity for free.

A free goods agreement is stored as a condition record. This means that the requirements for the agreement can be defined at any level, for example, at customer/material level or customer hierarchy/material level. The exclusive free goods agreement contains exactly one article as a guaranteed free good. You can set validity periods, and specify different rules for generating the quantity of free goods. You can determine if the customer has to buy a minimum quantity of goods before they receive the free good. The quantity of free goods can be set as a proportion of goods sold. Another rule specifies that the free goods quantity depends on the quantity of complete units sold. This means that free goods are only guaranteed if the customer has bought a whole pallet, for instance, and not a partial one.

Free goods is supported in the sales order by sales from stock. When a sales order is created, the system automatically creates the free goods items according to the agreement. A free good is displayed as an individual item and is a sub-tiem to the item which caused it to apply. Free goods are relevant for delivery and are copied to the delivery document. They can also be copied to the billing document which makes it possible to identify the free goods as a free of charge item.

A free goods item can be priced in the sales order and billing document. The item is rendered free of charge by applying a 100% discount at the end of pricing. This means that the cost of applying free goods can be accurately represented in the statistics and profitablility analysis. Here, the free goods can be displayed with production costs and as a particular type of sales deduction.

Limitations

At the moment free goods are only supported on a 1:1 relationship. This means that one sales order item can only lead to one free item. Agreements such as "Buy product 1 and get product 2 and 3 for free" or "Buy product 1 and 2 and get product 3 for free" are not supported.

Free goods will not be supported in combination with other article structures (for example, product selection, bill of material, variants with bill of material explosion).

Free goods will not be supported for deliveries which do not refer to a sales order.

Free goods will not be possible for make-to-order production, third- party order processing or scheduling agreements.

Further Information

You can find more detailed information in the R/3 library in Master Data for Sales and Distribution.

Change system parameters in customizing

"Free goods".