Practical challenges associated with rebates

Practical challenges associated with rebates

Thought Leadership

Practical challenges associated with rebates

Rebates (also known as volume discounts/bonus discounts) are financial incentives or advantages given by a manufacturer/supplier, in order to motivate the customers or the group of individuals to purchase in bulk. The supplier rewards those buying in bulk by providing a reduced price for each good or group of goods. Volume discounts allow businesses to purchase additional inventory at reduced cost and allow suppliers, to reduce inventories by selling more units to bulk buyers who are incentivized by the lower price.

The volume discounts can take on a variety of arrangements with the most common being retrospective in nature and are often tiered – that is, a specific discount is applied to X number of units within that tier. The discount increases as for tiers that include larger and larger numbers of units. Upon determining the discount amount, additional volume is supplied to the buyer of the same value of discount offered.


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