Customer-specific pricing: discounts, net prices and contract prices explained

Almost no trade supplier has one price. You have a list price, and then a set of agreements: the contractor who gets 15% off everything, the installer on better terms for one brand, the hotel group with a fixed price on the twenty lines it buys every week. That is customer-specific pricing, and it’s normal. What causes trouble is keeping it in people’s heads, in old emails and in a spreadsheet only one person understands.

This guide covers the common ways trade suppliers structure customer prices, how to decide which rule wins when two apply, and how to keep it all straight when your list prices change.

Start from one list priceLink to this section#

Everything below works from a single list price per product: the price before any customer’s terms. Keep it in one place and change it only when your prices genuinely change. A customer’s price is then list price plus their rules, not a separate number someone typed into a separate file.

The four common pricing structuresLink to this section#

1. An account discount off everythingLink to this section#

The simplest agreement: “you get 15% off list”. Easy to explain, easy to apply, and it moves automatically when your list prices move.

2. Brand or category discountsLink to this section#

Also called discount groups or discount codes. The customer gets a different percentage on different parts of your range: 30% off one manufacturer’s products, 20% off fixings, 10% off everything else. Electrical and plumbing wholesalers use these heavily because their own margins differ by brand.

3. Fixed net prices on agreed linesLink to this section#

A contract or net price is a set figure for one product: “£6.95 per box, whatever the list says”. Common for high-volume lines, tenders and contract customers who budget per item. Fixed prices don’t move when your list does, which is the point, and also the risk: review them at every price change.

4. MultipliersLink to this section#

Common in HVAC and electrical distribution: the customer pays list price times a multiplier. A multiplier of 0.55 is simply a 45% discount off list. If your industry talks in multipliers, you can store them as discounts and show both.

A worked exampleLink to this section#

One product with a list price of £10.00, and three customers:

When your list price rises to £10.60, A pays £9.01 and B pays £7.95, because discounts follow the list. C still pays £6.95 until you agree a new price.

Which rule wins when two apply?Link to this section#

Sooner or later a customer has a 15% account discount and 25% off one brand. Decide the rule once and write it down. There are three options:

• Most specific wins. A fixed price beats a brand or category discount, which beats an account discount. Predictable, and it matches how most agreements are negotiated. This is the rule we recommend.
• Best price wins. The customer always gets the lowest of their prices. Generous, but harder to predict and easy to get wrong by hand.
• Discounts stack. 15% then another 25% off the result. Avoid it: it compounds quietly and customers end up on terms nobody agreed.

Keep the rules fewLink to this section#

Every exception is something someone has to remember. A good test: could a new member of your sales team explain a customer’s prices in one sentence? “15% off everything, 25% off Brand X, and fixed prices on the six lines in their contract” passes. Twelve overlapping special cases don’t.

• Give each customer one account discount where you can.
• Use brand or category discounts only where your margins really differ.
• Keep fixed prices for lines that are genuinely contracted, and note when each was agreed.
• Review once a year, ideally just before your annual price rise.

Show customers their price, not the mathsLink to this section#

Customers shouldn’t have to work out their own price from your list and their discount. Every step they have to do is a chance to get it wrong, and a phone call to your office to check. Show each customer their net price directly, and when prices change, send each one their own old and new prices rather than a single percentage (see how to tell trade customers about a price increase).

How TradeCatalog handles customer pricingLink to this section#

TradeCatalog is built around this. You keep one list of products and prices, and give each customer a percentage off everything, a percentage off a brand or category, or a fixed price per item. The most specific rule wins and discounts never stack. Each customer signs in and sees only their own prices; your team can view the catalogue as any customer to check what they see and why. When list prices change, every customer is emailed their own old and new prices.

For clients whose staff should only buy agreed lines, you can also set an approved product list.

Questions suppliers askLink to this section#

What is the difference between list price and net price?Link to this section#

List price is your standard price before any customer’s terms. Net price is what a particular customer actually pays after their discount or agreed price. Trade customers care about their net price; your list price is the starting point you change once a year.

Should customer discounts stack?Link to this section#

Usually not. Stacking a 15% account discount with a 25% brand discount gives about 36% off, which is rarely what anyone agreed. Most suppliers use “most specific wins”: a fixed price beats a brand discount, which beats an account discount.

Is a multiplier the same as a discount?Link to this section#

Yes. A multiplier of 0.6 means the customer pays 60% of list, which is a 40% discount. Store it however suits your system, but make sure everyone agrees which way round it is.

How often should I review customer prices?Link to this section#

At least once a year, and at every list price change for customers with fixed prices, because fixed prices don’t move with your list. Many suppliers review agreements just before their annual price rise.