Price protection
Reviewed by Dasha ShakovVP Marketing, Proton
Updated
What is price protection?
Price protection is a supplier’s commitment that shields a distributor from a price change. It takes two common forms: a credit for the difference on stock still on hand when the supplier lowers its price, and honoring the old price on quotes or orders made before a price increase takes effect.
How it works
Protection on increases matters for project work, where a distributor may quote a job months before it ships. The terms are set in the supplier agreement, including how long the old price holds and how claims are submitted.
Price protection example
Six weeks before a manufacturer’s 6% increase takes effect, a distributor quotes a contractor’s job. Under the supplier’s price protection terms, that job still ships at the old cost.
Related terms
- Contract pricingContract pricing is a set of fixed prices agreed with a specific customer for specific items over a set period, after a negotiation, bid, RFP or GPO deal.
- Replacement costReplacement cost is what it would cost a distributor to buy an item again today, as opposed to what it paid for the stock already on its shelf.
- Price sheetA price sheet is a manufacturer’s list of the items in a product line, with part numbers, descriptions, pack quantities and list prices or costs.
- Ship and debitShip and debit is an arrangement in which a manufacturer lets a distributor sell to one customer or project below its normal cost, then repays the gap.
