- Pricing structure and policy
The pricing structure and policy of a supplier can affect how effectively the
business can represent the products in the market. It may also affect how
competitive the business will be. There is practically no limit to the variations
in pricing structures and policies, even within a particular industry. It remains
for the business to determine what is best for their situation and their market.
Some examples of suppliers' variations in pricing structure and policy are:
- One price for all businesses of a type, no matter how much is purchased.
- One price for all businesses of a type, but with certain annual volume
discount levels
For some businesses, the volume necessary to achieve a volume discount
may be unattainable for a variety of reasons and this may put the business
in an uncompetitive situation.
If a volume discount is achieved, suppliers may give a rebate in the form of
a credit to the customer's account or issue a cheque. - Some suppliers may use price tables.
Price tables are a published schedule of price levels for different levels of
volume purchased or different classifications of customers.- It is common to have a number of levels of pricing, for example 3–6 levels.
A manufacturer (brown) would have at least four levels of pricing—master
distributor (tan/yellow), distributor (tan/white), wholesaler (light
brown/yellow), and dealer (brown/white).
Within each of these general
classifications, each level may have a
schedule of prices for such categories as
retail, commercial, industrial, and
government, as well as special pricing for volume users of a single item.