When you buy anything from a vendor, the purchase price is derived based on many price components. Some price components include gross price, transportation cost, seasonal discount, mark up price, reward points, bulk discount, scale discount etc. Taxes are also included in the final price.
Again price terms can be net price, gross price, effective price or landed price. Determining net price, effective price or landed price for any material can be a tricky affair. There are so many price components and at the same time which components should be included or excluded so that you get the net or effective price for a material is a complex calculation.
In SAP MM there is an elaborate mechanism to calculate net and effective price for any material. At the same time, there is also a search mechanism which you can define so that the SAP system can search for the correct price for any material based on your search terms. This search mechanism you can use in cases when you want to search for price of a material based on your search criteria.
So effectively SAP has provided you 2 facilities. One, to derive effective and net price for a material and second, to find out net and effective price of a material based on your criteria.
In many cases, you provide a fixed formula to calculate net and effective price for a material based on vendor, purchasing organization and sometimes plant. But in some cases, this search facility for calculating effective and net pricing for a material is required. Suppose you have different pricing for a material based on plant or company code any other organization unit or any other factor. In that case, how you will be able to derive different effective and net prices for a material for each of the different organization unit? For this exact reason, SAP has provided the search function for finding net and effective prices.
In SAP MM customization you can create condition tables for creating the search criteria and then you can create an access sequence which will map the search criteria with the price components to calculate net and effective prices.