What facotrs can change trade discount rates?

Loopy girls don't ask these types of questions. This is a learning type question I would expect this to come from some one named, AsSmartAsIAm.

Basically there are tons of factors that go into the setting of prices on products. Discounts are driven by the size of the order, repayment of the debt, shipping cost, materilas for shipping and materials for building. What type of global issues am I facing. How much of a cut can I take for this customer. Can I sustain a cut across the board and still maintain a break even (+) profit. How much of I profit can I let go of. Are all my cost factors dead on documented. That's roughly the manufacturer's lament.

Now jump the table to the middleman. He has similar questions on both the incoming and outgoing products.

For example I a procruement specialist for a company that manufacturers "Widgets" Yes, for those of us that go back that far, Widgets were made my a make believe company in the Movie Wheeler Dealers. James Garner, Lee Remick. I saw that movie a 150 times while I was an usher at Radio City Music Hall, N.Y. circa 1962 through 965.

Any way, I order to make a profit on the widgets, I need to get the components and manufacture the product at less than my break even point. That means I really don't want to have my assembly costs, shipping and handling go over the $1.25 per unit price point.

However, WallyWordl just called and they are telling me that they will order submit an order and pay up front for the order if I will guarantee a price of $1.20 a unit with there transportation division handling the transportation, at no cost to me from my Mississippi Delta manufacturing plant. Okay, WallyWorld, how much of an order can you take. 500,000 units up front, with a potential order for and additional 75,000.

I roll my eyes and with greed running wild in my heart I find out that I can't sustsain that order rate or 1, discover, that I cannot meet my costs let along profits if I accept his order.

So I counter. Tell you what, If you Wallyworld, take 1.75 million units, on your initial order and you handle the transportation cost to your distribution center, then we have a deal and I'll hold steady for a secondary order at the same price and terms for 75000 additional units.

Well it's my lucky day. The next call I get is from Kalamazoo's dolloar stores. They are willing to order 250,000 widgets @$1.15 with my firm paying the shipment costs to Bermuda.

At first blush, not a good deal except that the Bermudian currency is currently running three times stronger than the US Dollar.

Now, with all that running on, the Suez Canal just gets shut down for repairs. My ship carrying the components will be delayed as it passes through the lock. Do I have to arrange to off load the cargo ship to airlift my components here so I an now meet two contracts?

You figure it out, I' m tried from making it up!