Special Pricing Agreements

Process improvements will enable distributors and manufacturers to manage their common special price agreements smoothly and transparently, reduce administrative burdens, eliminate errors and discrepancies and promote the judicious and efficient use of special price agreements in the market. This will enable suppliers and distributors to forge strategic partnerships to outperform their competitors and increase their turnover and influence in the market. A U.S.-based study showed that software for tracking, transferring, and allocating vendor funds is a critical factor in sales success, with specific pricing agreements. Distributors in our sector report a virtual explosion in the use of the SPA. One distributor said his organization has grown from a few dozen spa deals in 2005 to more than 300 today. And they continue to accumulate. Maintaining or increasing the production margin is considered a profitable growth method among distributors. Industry data confirms that about half of distributors` profits are now based on cost-covering programs (PPS programs). These programmes need to be well managed to be financially successful, especially given the increased focus of regulators on CONTROLS AND REPORTS ON PPS. Typically, special pricing agreements are negotiated between a sales agent in the distributor`s subsidiary or pricing department and the manufacturer`s field service team. Some special price agreements are initiated by the manufacturer, others by the distributor and others by the beneficiary contractor or installer. However, we found a significant difference in the performance of special price agreements, as a percentage of the cost of goods sold, for companies based on their tracking/transfer systems.

Duplication in many areas is a monumental obstacle to the proper functioning of a successful special price agreement that opposes the fundamental collaborative nature of the agreement. . . .