Back margin

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Expressed as a percentage, the back margin is the difference between the initial selling price from the supplier and the invoiced price. Theoretically considered as a service, it bears the VAT. From a legal point of view, we now speak of “other financial benefits”. This type of margin is especially practiced between the large signs and their suppliers in the field of the large distributions. The method of calculation and the conditions of this rebate are defined during the annual commercial negotiations. In general, suppliers agree to provide a back margin in exchange for :
– the increase in product sales
– reaching a certain sales volume over a given period,
– recycling collection by the distributor
– prime space or more visibility for the product. For example, large retailers can put the product at the top of their shelves or dedicate a large space in the store’s catalog to it.
In most cases, back margins can be as high as 30-40% of the original selling price obtained from a supplier. They are framed and legally limited to avoid any abuse of suppliers by the major brands.