Scan-Backs, Scan-Downs - Definition & Meaning
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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