# Distributor Pricing and Rebate Terms Glossary > Source: https://netray.co/tools/distributor-pricing-and-rebate-terms-glossary > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Plain definitions of the pricing, cost and rebate terms that appear in distributor ERP setup and vendor agreements. ## Category supply-chain ## Industry Wholesale Distribution ## Audience - Pricing analyst - Sales operations - ERP administrator - Purchasing manager ## Tool **Kind:** worksheet **Mode:** reference **Columns:** #### Term **Key:** term **Type:** text #### Meaning **Key:** meaning **Type:** text #### Where it appears **Key:** area **Type:** text #### Watch out for **Key:** watch **Type:** text **Rows:** #### List price **Meaning:** Published price before any customer or volume discount **Area:** Price book, catalog **Watch:** Not the same as the price most customers pay #### Multiplier **Meaning:** A factor applied to list price to get a sell price, such as 0.62 of list **Area:** Customer or product group pricing **Watch:** Check whether it is applied to list or to cost #### Matrix pricing **Meaning:** Sell price derived from a grid of customer class and product class using cost plus or list minus rules **Area:** Pricing setup **Watch:** Cell overlaps give unpredictable results #### Cost plus **Meaning:** Sell price equals a cost basis plus a percentage or amount **Area:** Contract and matrix pricing **Watch:** State which cost basis is used #### Contract price **Meaning:** A price agreed for a customer and item, often for a fixed period **Area:** Customer contracts **Watch:** Expiry dates need a review process #### Quantity break **Meaning:** Price that changes at defined order quantities **Area:** Price pages **Watch:** Decide if the break uses line quantity or order quantity #### Replacement cost **Meaning:** Current cost to buy the item again from the vendor **Area:** Costing, pricing basis **Watch:** Moves with every vendor price change #### Average cost **Meaning:** Weighted average of what was paid for on-hand stock **Area:** Inventory valuation **Watch:** Lags behind market price #### Standard cost **Meaning:** A fixed planning cost reviewed on a schedule **Area:** Costing **Watch:** Variance accounts need a monthly look #### Last cost **Meaning:** The cost on the most recent receipt **Area:** Costing, quoting **Watch:** One odd receipt can skew it #### Rebate **Meaning:** A payment from a vendor or to a customer after a volume or growth threshold is met **Area:** Vendor agreements, customer programs **Watch:** Accrue it as sales happen, not when paid #### Growth rebate **Meaning:** Rebate paid only on volume above a prior-period baseline **Area:** Vendor agreements **Watch:** Baseline definition drives the payout #### Tiered rebate **Meaning:** Rebate rate increases as volume passes tier thresholds **Area:** Vendor agreements **Watch:** Know if the rate applies to all volume or only the excess #### Retroactive rebate **Meaning:** When a tier is reached, the higher rate applies back to the first dollar **Area:** Vendor agreements **Watch:** Accrual estimates can swing near a threshold #### Ship and debit **Meaning:** Distributor sells at a lower price to win a deal and claims the difference from the vendor **Area:** Vendor claims **Watch:** Needs approval before the sale in most programs #### Special pricing agreement (SPA) **Meaning:** Vendor-approved special cost for a named customer or project **Area:** Vendor programs **Watch:** Match to the exact quantity and date range #### Price protection **Meaning:** Vendor credit for stock on hand when the vendor lowers its price **Area:** Vendor agreements **Watch:** Claims usually have a short filing window #### Stock rotation **Meaning:** Right to return slow stock to a vendor, often capped at a percent of purchases **Area:** Vendor agreements **Watch:** Returns often need prior authorization #### Spiff **Meaning:** A cash incentive paid to a salesperson or counter staff for selling a product **Area:** Vendor and internal sales programs **Watch:** May be taxable compensation #### Freight allowed **Meaning:** Order value above which the vendor pays freight **Area:** Purchasing terms **Watch:** Check whether threshold is per order or per shipment #### Terms discount **Meaning:** Early-payment discount such as 2/10 net 30 **Area:** Accounts payable and receivable **Watch:** Annualized value is high, so capture it #### Core charge **Meaning:** A deposit on a returnable core, refunded when the used part is returned **Area:** Parts distribution **Watch:** Track it separately from item revenue #### Restocking fee **Meaning:** A fee charged on returned goods to cover handling **Area:** Return policy **Watch:** Must be in the customer terms to be enforced #### Gross profit floor **Meaning:** A minimum margin below which a quote needs approval **Area:** Quote approval rules **Watch:** Floors should vary by product class **Notes:** Terms vary by vendor and country. Always follow the wording in the signed vendor agreement or customer contract. ## Content **Intro:** Pricing and rebate language is where distributor ERP projects stall, because the same word means different things in sales, purchasing and finance. This glossary gives short working definitions and the usual trap for each term, so setup decisions are made with shared meaning. **Sections:** #### How to use the glossary **Body:** Use it as a pre-read for a pricing workshop or a vendor agreement review. Search a term, read the meaning and the watch-out, and then confirm with the actual document in front of you. When your team uses a term differently, write your own meaning in the exported sheet. That sheet becomes the pricing data dictionary for the ERP configuration and for report definitions. #### Cost basis decisions **Body:** The most expensive confusion is the cost basis. Replacement cost, average cost, last cost and standard cost can differ by several percent on volatile items, and margin reports built on the wrong one mislead sales. Pick the basis for each use: quoting often uses replacement cost, valuation often uses average or standard, and rebate accrual follows the vendor agreement. Document these choices. #### Rebates and claims **Body:** Vendor money arrives in three ways: rebates after volume, claims such as ship and debit or price protection, and terms discounts. Each needs its own tracking, because the evidence differs. Rebates need purchase totals per period, claims need the customer, quantity and approval reference, and discounts need the invoice and payment dates. Mixing them in one spreadsheet is a common reason money goes unclaimed. **Bullets:** - Rebates: accrue monthly against purchases - Claims: file inside the vendor window - Terms discounts: pay by the discount date - Keep the signed program documents with the claim #### Common mistakes **Body:** Teams often load multipliers without recording which price they apply to, let contract prices run past their expiry, and treat a retroactive rebate tier like a marginal one. Another frequent error is paying spiffs outside payroll. A short review of the terms in this table before go-live catches most of these. **Cta:** If your price lists, contracts and vendor programs are scattered across files and ERP screens, we can discuss a read-only review of how they are used in your own data. **Faq:** #### What is the difference between margin and markup? **Answer:** Markup is profit as a percent of cost, while margin is profit as a percent of the selling price. An item bought at 80 and sold at 100 has a 25 percent markup and a 20 percent margin. Mixing them is a very common pricing error. #### What does ship and debit mean? **Answer:** The distributor sells to a customer at a price below its normal cost, then bills the vendor for the difference, usually after getting the vendor's approval on the deal. The claim needs proof of the sale, quantity and approval reference. #### Is a retroactive rebate better than a tiered one? **Answer:** A retroactive rebate pays the higher rate on all volume once a tier is reached, so it is more valuable near a threshold. A marginal tier pays the higher rate only on the volume above the threshold. Read the agreement to know which applies. #### Which cost should I use for quoting? **Answer:** Many distributors quote from replacement cost because it reflects what the next unit will cost. Others use average cost to keep prices stable. Choose one policy per product class and apply it consistently so margin reports can be compared. ## Search terms distributor pricing terms, matrix pricing definition, ship and debit meaning, special pricing agreement distributor, rebate terms glossary, wholesale pricing glossary, distribution contract pricing, replacement cost vs average cost --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json