Scan-Backs, Scan-Downs

Published by MBA Skool Team, Last Updated: January 22, 2018

What is 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.

 

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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