1. BMW Group Pricing Policy

2. There are few factors that have more influence in the success of a business than the pricing strategy.
Due to the increasing global competition and information flow it is of growing importance to keep
control of the different factors that affect the pricing policy.
The Pricing Manager must consider Costs, Customer and Competition.
A worldwide price harmonization is necessary to prevent the loss of sales to alternative distribution Channels.
VT (sales parts and accessories) is responsible for the global pricing for parts and accessories.
The basis for the suggested retail price is the pricing relation in the German market. The subsidiaries should adapt these prices to the local market situation.

3. BMW Group Recommended Retail Price* (RRP)
Influencing Factors on BMW Group Retail-Pricing
Example:
Part No
Sensor
RRP: EUR 38,60
Price
Positioning
Primary Product
Profitability of
BMW Group
and Importers
Depreciation
of older
Vehicles
BMW Group Recommended Retail Price* (RRP)
Cost-of-
Ownership
Pricing SA
(Accessories)
Price Positioning
of car
manufacturing
Competitors
Insurance
Rating
Competitor’s
Pricing of Parts
and
Accessories
* All BMW Group Recommended Retail Prices are manually calculated

4. Discount Code Assignment
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory = RRP – 25% = EUR 28,95
Captive Parts
Slow Moving Items
High Priced Items
Cost of Ownership
Low Discount
Competitive Parts
Fast Moving Items
High Discount
Criteria:
Retail Price
BMW Group Retail - Discount code (%) = Ex-Factory
Ex Factory
Discount Code

5. Examples for Discount Code Assignment
Body Skeleton
Discount code A
Oil Filter Insert
Discount code I
Rmd. Control Unit
Discount code A
Rocker Cover Gasket
Discount code K

6. Discount Code Structure
Target:
All parts assigned to one family code to have the same discount code!
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory: EUR 28,95

7. Family Codes
BMW Group classifies the total parts range of more than items into approx „family codes"
to simplify the pricing for comparable parts in one family. A family code can have up to 10 digits.
Example: Engine Electrical Systems
Ignition
Distributor
Distributor Cap
Rotor Arm
Pulse Generator
Ignition Coil
Spark Plugs Single
Spark Plugs Set (4 pieces)
Spark Plugs Set (6 pieces)
DME Control Unit (Exchange)
DME Control Unit
Ignition Cable Sets/Wires
Spark Plug Socket
Transmitters
Miscellaneous Items
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory: EUR 28,95
Family Code:

8. Data Transmission parts price information
BMW Group transmits the parts coding file on a monthly basis
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory: EUR 28,95
Family Code:
This information must be stored by part number and updated monthly in the master file !
The essential data fields published for automatic pricing are:
Part Number
Description
BMW Group
Retail
BMW Group
Discount
Family
Code
...
...
Ignition coil
Sensor
...
95,00
38,60
... E D
...
121020
121060

9. Shadow File complete SA40 Master File active parts SA40 monthly UPDATE
The master file must have the actual data
per part number, not old and therefore
no longer reliable data. 1
Shadow File
complete SA40
(Teklam for IMPHL) 1
Master File
active parts
(Testam for IMPHDL)
UPDATE
Activate PN
30 000

10. Market Retail Price Calculation1
Common Way of Retail Price Calculation in the Importer Markets 2
Calculation using Retail-Factors based on coding groups

11. Historical cost-based Retail Price Calculation
Mark-Up-Factor covers Landed-Cost, Exchange Rate, Importers Gross Profit and Dealer Discount.
Market - Retail
Example: 20% Dealer Discount
Dealer- Net
BMW Group Retail
Ex Factory
Discount Code

12. Drawbacks of common Method in the Importer Markets
This method presents in some cases higher prices than what the customer is willing to pay.
In other cases the price is to low.
It does not allow simple adaptation to market situation and therefore blocks competitiveness.

13. Recommendation
Calculation using Retail-Factors based on coding groups

14. Calculation using Retail-Factors based on coding groups
Prices are no longer calculated based on the Ex Factory but based on the VT-Retail.
For each coding group a so called "Retail-Factor" will be applied.
VT-Retail
Retail Factor (RF)
Factory Discount
A B C D E F G H I K
Market Retail
= VT-Retail x RF
Ex-factory
= VT-Retail - Discount
Market Discount
LCF
A B C D E F G H I K
Landed Cost Price
= Ex-factory x LCF
Wholesale
= Market Retail- Discount
Gross Profit
Calculation using Retail-Factors based on coding groups

15. Retail Factor Table
For each family code a "Retail-Factor" needs to be set in the local systems.
Using the table with all „Retail-Factors“ the individual market retail prices are calculated on a part number level.
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory: EUR 28,95
Family Code:
Retail Factor: 1.30
Market Retail Price = 38,60 x 1,30 = EUR 50,18
Example:
Family Code
Description
Retail-Factor
...
121011
121012
121020
121060 ..
Distributor Cap
Rotor Arm
...
Sparkplug
Transmitters
...
1,25
1,35
1,10
1,30

16. Possible Dealer Discount Table
The relation between Market Retail and Dealer Net Prices is defined by the market discount.
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory: EUR 28,95
Family Code:
Retail Factor: 1.30
Market Retail Price: EUR 50,18
Dealer Net = Market Retail Price – 26% = EUR 37,15
To classify each item to the market discount codes the BMW Group discount assignment should be adopted.
The BMW Group discount structure will consist of 10 levels
Possible Dealer Discount Table
A B C D E F G H I K

17. Recommended Market Retail Price Calculation-
Retail
EUR 50,18
Retail
factor
EUR 13,05 = 26%
Dealer
discount
RRP
EUR 38,60
EUR 37,15
Dealer Net
Partner
EUR 9,65 = 25% d
iscount Ex -
Factory
EUR 28,95
Example:
Part No
Sensor
RRP: EUR 38,60
Discount Code: D = 25%
Ex Factory: EUR 28,95
Family Code:
Retail Factor: 1.30
Market Retail Price: EUR 50,18
Dealer Net: EUR 37,15

18. Automatically calculated
=> The concept allows up to 95% automatic price calculation.
Manual prices originate from individual situations.
max. 5%
=> offers an overall view, a better control and
flexibility to adapt to local
and global conditions
Manually priced
min. 95%
=> contributes to the global
price harmonization
Automatically calculated
=> Higher customer satisfaction
=> Customer recovery
Number of line items

19. Additional use of coding groups
1.- Simple pricing in a more sophisticated and
detailed manner.
2.- Sales control and analysis per coding group
3.- Increased competitive ability due to a simpler
adaptation to constant market changes
4.- Create management reports to support decision-making