Scan-Backs, Scan-Downs

Posted in Marketing and Strategy Terms, Total Reads: 1335
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Definition: Scan-Backs, Scan-Downs

Scan downs is the money grant you get from a manufacturer when you sell a product. Scan downs main aim is to benefit a manufacturer since retailer tries to sell large units of product in order to get a grant.

 

Scan-downs are determined by companies through various algorithms. In order to stimulate sales a manufacturer will often reimburse a retailer for each product sold in a specified time period. Sometimes manufacturers also offers bulk discounts for introductory products. Employees can roughly estimate how much money they can make on each discounted product.

 

For example:

Let’s assume that cost of a producing a gel pen is Rs 6. However the pen is sold at Rs 10 in the market, thus gross profit from one sale= Rs 4 (10-6).

But during a sale, the manufacturer may offer a Rs1 scan down on each sale, and this profit is pocketed by the retailer.

 

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