Smarter Pricing: How to capture more value in your market

Prevent profit leakage

Uncontrolled or unnecessary discounts are only one form of profit leakage. Allowances also transfer value from supplier to customer. Consider the increasing power of European supermarkets, whose demands for supplier allowances is mushrooming. Investigative food journalist Joanna Blythman (2005) gives many instances of required or requested payments in her book, Shopped: the Shocking Power of British Supermarkets:

• pre-condition for being listed

• for better display positions

• for increasing range or depth of distribution

• for promotions

• retrospective discounts if sales fail to reach projected volumes

• payments to cover product wastage

• requested buybacks of unsold products

• contribution to costs of store refurbishment.

Looking only at ...