What you charge and on what conditions.
WHAT PRICING STRUCTURE TYPICALLY APPLIES
A price list, with tiers by volume or customer type.
WHY TIERS
Larger buyers expect better prices and it is defensible if it is structured.
WHAT TO ESTABLISH
Clear tiers, applied consistently.
WHY CONSISTENTLY
Individually negotiated prices become impossible to manage and they leak.
WHAT TO AVOID
Discounts given to close a sale, unrecorded.
WHY
They persist forever and they erode the margin invisibly.
WHAT TRADE TERMS TO DEFINE
Payment terms Delivery terms and any charge Minimum order value Returns policy Credit limit
WHAT TO CHARGE FOR SEPARATELY
Delivery below the minimum order Special deliveries outside the schedule Returns that are not faulty
WHY
They consume cost that the price does not cover.
WHAT SETTLEMENT DISCOUNTS PROVIDE
Faster payment.
WHAT THEY COST
Margin, on every invoice.
WHAT TO CALCULATE
Whether the discount costs less than the funding it saves.
WHAT TO ESTABLISH ABOUT PRICE INCREASES
Notice to customers, in writing.
WHY NOTICE
Unannounced increases produce disputes and refused deliveries.
WHAT TO DO WHEN SUPPLIER PRICES RISE
Pass them on promptly.
WHY
Distribution margins cannot absorb increases.
WHAT TO MONITOR
Realised margin against list margin.
WHAT A GAP REVEALS
Discounting that nobody authorised.
