Published by MBA Skool Team, Last Updated: November 06, 2014
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.
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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