When dealing with data, and all related terminology, you may feel like you’re trying to speak a foreign language. In the interest of keeping things clear and simple, we will introduce commonly-used terms in each newsletter that will help you navigate the data shorthand and learn the lingo. This week, we bring you: Net Pricing.
Commonly referred to as “into stock nets,” net pricing is the confidential, negotiated price that a distributor will pay for a manufacturer’s product. This price typically varies by distributor, or even by individual distributor branches, based on a number of factors, including sales performance.
“Net price” should not be confused with “list price,” which refers to a manufacturer’s suggested retail price (MSRP). “List price” is the price at which a manufacturer suggests the distributor sell a manufacturer’s product in stores. For example:
A manufacturer sells widgets to his distributor trading partner. The manufacturer’s list price for the widget is $30, and the distributor’s net price has been set at $20. The distributor will use that net price to determine his mark-up in stores. If the distributor decides to sell at the manufacturer’s list price, or MSRP, of $30, the distributor will see a gross profit of $10.
In the Industry Data Warehouse (IDW), net pricing can be found in the pricing column, as seen in the example below.
Other common pricings include:
C: The published distributor cost. The specific and confidential net price may be a percentage discount from this cost.
L: The list price, or MSRP, of an item (full definition above).
T3: This is a trade price, also referred to as ‘column-3’ price, and is typically the price used for a distributor’s best customer. This price may be used in a quantity break or another type of discount with an end user.
Many manufacturers do provide their distributors’ net pricing through the IDW, enabling them to extract that information along with regular data downloads. If not, distributors can also send along their net price lists to IDEA for incorporation in their automated, confidential downloads in their preferred format. The IDW regularly passes security audits to ensure our hosted data is secure, and only available to manufacturers’ authorized distributors.