Rebates

Lump-sum rebate

Also called: Fixed rebate · Marketing allowance

A fixed payment agreed for a period or a commitment, not calculated per transaction.

A lump sum is easy to settle and hard to allocate. Because it is not per-transaction, spreading it across the products, customers or periods that earned it requires an allocation basis, and the basis chosen materially changes reported line and category profitability.

The common shortcut — booking it centrally as other income — makes funded categories look unprofitable and unfunded ones look strong, which then distorts assortment and pricing decisions.

Related terms

Rebate

A payment made after a qualifying transaction, returning part of the price based on volume, growth, mix or behaviour agreed in advance.

Accrual

The liability or receivable recognised as a rebate is being earned, before it is actually settled.

Net-net price / cost

Price or cost after all rebates and allowances — on the sell side, what you keep; on the buy side, what you truly paid.

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