Incentive Rate

Posted in Operations and Supply Chain Terms, Total Reads: 963

Definition: Incentive Rate

Incentive Rate is a common term used in business, shipping and taxing parlance. It refers to the rate levied on a consumer for utilities when there is a favorable change in the usage patterns.

Example- if a consumer consumes less or no electricity during peak hours, then an incentive rate is levied on them. It is a discounted rate on utilities.


Now, if we define this term in shipping parlance, it means the lower than tariff rate levied on the shipper. This is done because the shipper offered a greater volume for transportation than specified in the tariff.


Advantages of Incentive rate

1. Better client-consumer relationship

2. Symbiotic association

3. Optimal utilization of resources or technology


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