I hope this email finds you well. I am Raj Jain from Hyderabad and I am writing to seek clarification on how to calculate rate difference claim against the brand/company.
As a distributor and channel partner between the brand and retailer, I have come across a scenario where I need to calculate the rate difference claim. I would appreciate it if you could guide me on the correct method to calculate this.
To provide you with more context, let me explain the situation. Company A (mother company) sells to Company B (distributor), considering retailer margin at 7.69% mark down and distributor margin at 10% mark up. Let's consider the MRP of a product is 1250 (incl. GST @ 18%).
Therefore, company A bills to company B as per the below bifurcation:
RLP (Retailer Landing Price) @ 7.69% mark down = 1153.87
RLP (ex. GST) 1153.87/1.18 = 977.85
DLP (Distributor Landing Price Ex. GST) @ 10% mark up 977.85/1.10 = 888.95
Invoice Price to company B (888.95×1.18) = 1048.96
Profit of company b (distributor) while selling at 7.69% mark down discount on MRP (977.85-888.95) = 88.89 (this will remain fixed, as the company follows fixed invoicing)
No change in the invoice, even though RLP may differ and any extra margin given to the retailer will be claimed.
At some point, company A instructs Company B to sell the same product at 20% to a particular retailer.
Billing price to retailer (1250 less 20% mark down) = 1000 incl. GST
Billing price to retailer at 20% discount ex. GST (1000/1.18) = 847.45
Since on instruction from company A, I am selling at a lower price than the desired selling price in billing, therefore I am entitled to a rate difference claim from company A (847.45-977.85) = 130.40.
I would appreciate it if you could confirm whether my calculation is correct or not. If there is any other method to calculate this, please let me know.
Thank you for your time and assistance. I look forward to hearing from you soon.