14 Rebate Types Explained
Fixed (%)
A Fixed (%) rebate is a rebate mechanism where the rebate amount is a set percentage of the transaction value or volume. This percentage remains consistent for each qualifying transaction throughout the program, regardless of the total transaction amount or volume.
Example: A manufacturer offers a 5% rebate on every purchase. If a customer buys products worth $100,000, the rebate will be $5,000, and the same 5% rebate will apply to future purchases during the program period.
Fixed (Amount)
A Fixed (Amount) rebate provides a set rebate value that doesn’t change based on the volume or value of purchases. The total rebate amount is agreed upfront and remains the same throughout the program. It can be paid all at once (lump sum) or in parts over time (apportioned).
Example — Lump Sum: A supplier agrees to pay a $50,000 rebate if a customer meets a minimum purchase target during the year. If the target is reached, the full $50,000 is paid at year-end.
Example — Apportioned: A supplier agrees to pay a $40,000 rebate over the course of a year. The amount is split into four equal payments of $10,000 each, paid quarterly, regardless of transaction value.
Fixed (Unit Rate)
A Fixed (Unit Rate) rebate offers a set rebate amount for each unit sold or purchased. The rebate per unit stays the same throughout the program, regardless of how many total units are involved.
Example: A supplier offers a $2 rebate for every unit purchased. If a customer buys 5,000 units during the year, they receive a total rebate of $10,000. If they buy 10,000 units, the rebate totals $20,000.
Fixed (Lump Sum)
A Fixed (Lump Sum) rebate is a one-time rebate payment given when specific conditions or targets are met. The total rebate amount is agreed upfront and does not vary with the volume or value of transactions.
Example: A supplier offers a $100,000 rebate if a customer purchases at least $1 million worth of products during the year. If the customer meets the target, they receive the full $100,000 as a single payment at the end of the year.
Volume Quantity (%)
A Volume Quantity (%) rebate is a percentage-based rebate tied to the number of units purchased. The percentage may increase as the customer buys more units, based on predefined quantity thresholds.
Example: A supplier offers a 2% rebate if a customer buys up to 5,000 units, 3% if they buy between 5,001 and 10,000 units, and 5% if they buy more than 10,000 units. If the customer purchases 12,000 units, they receive a 5% rebate on the total purchase value.
Volume Quantity (Unit Rate)
A Volume Quantity (Unit Rate) rebate gives a fixed rebate amount per unit, with the rate increasing based on how many units are purchased. Higher unit volumes unlock higher rebate rates.
Example: A supplier offers $1 per unit for up to 5,000 units, $1.50 per unit for 5,001–10,000 units, and $2 per unit for anything above 10,000 units. If a customer buys 12,000 units, they receive a $2 rebate for each unit, totaling $24,000.
Volume Quantity (Fixed Amount)
Volume Quantity (Fixed Amount) Rebate: A Volume Quantity (Fixed Amount) rebate gives a set rebate amount based on how many units are purchased. The total rebate value increases in steps as the purchase volume crosses specific unit thresholds.
Example: A supplier offers a $10,000 rebate if a customer buys at least 5,000 units, $20,000 if they buy 10,000 units, and $30,000 if they buy 15,000 units or more. If the customer buys 16,000 units, they receive a $30,000 rebate.
Volume Amount (%)
A Volume Amount (%) rebate is a percentage-based rebate tied to the total value of purchases. The rebate percentage increases as the total spend crosses predefined monetary thresholds.
Example: A supplier offers a 2% rebate if a customer spends up to $500,000, 3% for $500,001–$1,000,000, and 5% for anything above $1,000,000. If the customer spends $1.2 million, they receive a 5% rebate on the entire amount, which equals $60,000.
Volume Amount (Unit Rate)
A Volume Amount (Unit Rate) rebate gives a fixed rebate amount per unit, with the rate increasing based on how much the customer spends. Higher spend levels unlock higher per-unit rebate rates.
Example: A supplier offers $1 per unit if a customer spends up to $500,000, $1.50 per unit for $500,001–$1,000,000, and $2 per unit if the spend exceeds $1,000,000. If the customer spends $1.2 million and buys 10,000 units, they receive $2 per unit, for a total rebate of $20,000.
Volume Amount (Fixed Amount)
A Volume Amount (Fixed Amount) rebate provides a set rebate amount based on the total spend. The rebate amount increases in fixed steps as the customer reaches higher spending thresholds.
Example: A supplier offers a $10,000 rebate if the customer spends at least $500,000, $20,000 for $1,000,000, and $30,000 for $1,500,000 or more. If the customer spends $1.6 million, they receive a $30,000 rebate.
Growth (%)
A Growth (%) rebate offers a percentage rebate based on how much a customer increases their purchases compared to a previous period. The greater the growth, the higher the rebate percentage.
Example: A supplier gives a 2% rebate for 5% year-over-year growth, 4% for 10% growth, and 6% for 15% or more. If a customer grows their purchases by 15% compared to last year, they earn a 6% rebate on their total spend.
Growth (Fixed Amount)
A Growth (Fixed Amount) rebate provides a set rebate amount when a customer increases their purchases over a previous period. The rebate amount may increase in steps based on how much growth is achieved.
Example: A supplier offers a $10,000 rebate if purchases grow by at least 5%, $20,000 for 10% growth, and $30,000 for 15% or more. If the customer grows their purchases by 12%, they receive a $20,000 rebate.
Growth (Unit Rate)
A Growth (Unit Rate) rebate offers a fixed rebate amount per unit based on how much a customer increases their purchase volume compared to a previous period. The rebate per unit increases as the growth in units purchased rises.
Example: A supplier offers $1 per unit if the customer’s purchase volume grows by 5%, $1.50 per unit for 10% growth, and $2 per unit for 15% or more. If the customer increases their purchase volume by 10%, they receive $1.50 per unit on all units purchased.
Tiered Progressive Rebate
A Tiered Progressive Rebate offers increasing rebate rates as the customer reaches higher purchase levels. The rebate percentage or amount progressively increases based on the total spend or units purchased, with different "tiers" that unlock better rebate rates.
Example: A supplier offers a 2% rebate on purchases up to $500,000, a 3% rebate for amounts between $500,001 and $1,000,000, and a 5% rebate for purchases over $1,000,000. If a customer spends $1.2 million, they receive a 2% rebate on the first $500,000, 3% on the next $500,000, and 5% on the remaining $200,000.