What it means
When a contractor is bidding a competitive project, a distributor may ask the manufacturer for special pricing to help win it. If the manufacturer agrees, it issues an agreement — often with a reference number — covering specific products, prices, the customer or project, quantities and an expiry date. Manufacturers use different names for these arrangements, and their processes differ.
A common pattern, often called ship-and-debit, works like this: the distributor buys the product at its normal cost, sells to the contractor at the special price, and then claims the difference back from the manufacturer — usually with supporting documents and within a deadline.
An example: a distributor gets special pricing on switchboards for a contractor bidding a hospital project. When the contractor wins and places the order, the distributor sells at the agreed price, records the agreement reference on the order and submits a claim to the manufacturer for the difference.
Why it matters
- Winning work. Special pricing helps contractors and distributors win competitive projects.
- Protecting margin. If the special price is given but the claim is never made — or is rejected — the distributor can lose money on the sale.