Discounts are often even more important to us consumers than the final price to be paid. After all, a high discount percentage or discount amount suggests that the selling party earns at least from the transaction. And that the purchasing party (usually the consumer) makes a good move. Many companies and shops give their customers this pleasant feeling and make their recommended prices extra high, so that they can give a nice discount to the customer and still make a nice profit. Talk about deception! What price and discount systems are common from company to company?
Functional discounts
If the manufacturer of a product determines a gross consumer price, he will do so on the basis of the price level already on the market for a comparable product and on the basis of its cost price. If all goes well, his cost price will be sufficiently favorable that he can build in sufficient margin between cost price and gross recommended retail price to reward the intermediaries in the market for the performance to be delivered and also retain a profit for himself.
For example, the price calculation of the product can be structured as follows:
- Recommended consumer price excl. VAT = 100
- discount for retailer 20%
- discount for wholesale 20%
- profit for the manufacturer 20%
- cost price 51.20
No one will dispute the need for such a reward system for wholesalers and retailers, as the discounts here reimburse the costs of stockholding, distributing, financing, assembling the range and selling.
Extra discount
But of course no retailer is satisfied with the above-mentioned standard discount on the recommended retail price offered to him by the wholesaler. And all wholesalers, in turn, also want more discount from the manufacturer than the percentage initially proposed. The arguments put forward by business buyers vary from: we receive a much higher discount percentage from your competitor to We generate much more turnover than an average buyer and are also much better than someone else, so we also hear a more favorable get a discount than someone else
Advantage over the competition
Sometimes these arguments are valid, but what it really comes down to is that the buyer (both wholesaler and retailer) wants a more favorable position in the market than his competitor. If the supplier responds to the request and increases the discount slightly, he will always have to realize that a discount percentage once given can never be reduced again without an argument with the customer. A downward discount adjustment for the regular customer has the same negative effect as a salary reduction for the staff.
Grant a discount without being tied to it forever
How can the manufacturer or wholesaler avoid this adverse effect of being permanently stuck with a percentage once granted and still offer the customer an extra purchasing advantage (preferably temporarily).
Netto prices
A net price will be agreed with the customer for a number of popular items, which cannot be directly converted into a logical discount percentage. Because discounts cannot be reversed without a fight, but net prices can be increased at any time without a fight. At most, the customer will temporarily go to a competitor if they price themselves out of the market.
Free articles
Another option is to add certain accessories for free. For example, batteries for an electrical appliance. The supplier can also change this at a certain time.
Quantity discount
For example, if you purchase 10 pieces at a time, the manufacturer or wholesaler can give his customer a copy for free.
Temporary special project award
Only applies to a specific project for a pre-agreed number. Even then, people prefer not to work with a discount percentage. But preferably not with a lower net price than normal, because in practice it will not be easy to increase that special net price to the normal level after the end of the project. After all, the buyer now knows the back of his supplier’s tongue. This can be solved by giving one in so many items for free or with other free additional items, so that the supplier can continue to invoice the normal higher price normally.
Annual bonus
An additional discount will be granted for a certain turnover at the end of the year. Other bonus constructions are possible: e.g. an exclusivity bonus or a seasonal bonus
The game
Company buyers are people too, they just want something extra so that they can prove to their boss that they are useful to the company. Naturally, a smart seller does not give anything away in advance, but he ensures that after tough negotiations there is still something in his pocket to give a certain purchasing advantage, so that he can close the deal.
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