The Sales Contract: Commitments and Incentives

Originally Published MX November/December 2003

ADVERTISING, DISTRIBUTION, & SALES

The following scenario is a simplified example of a contractual commitment structure. An actual sales contract can cover multiple business units and product categories, and thousands of stock-keeping units. Manufacturers offer different price levels based on the purchase commitments the customer is willing to make. In this example, the customer has contracted to purchase in patterns that qualify it for the best, Tier 1, pricing for Product Category 1.